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Similitudes and Discrepancies in Post-Keynesian and Marxist Theories of Investment: A Theoretical and Empirical Investigation

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Author Info

  • Marc Lavoie
  • Gabriel Rodriguez
  • Mario Seccareccia

Abstract

There has been a substantial amount of convergence between post-Keynesian and Marxist economics, the writings of Kalecki being common ground for both traditions. Still, some differences remain. While authors in both traditions seem to agree to a large extent on short-period issues, long-period matters relating to the role of saving, the rate of profit, inflation, crowding out, excess money supply, are still contentious. All this seems to depend on the exact form taken by the investment function, more specifically the role of capacity utilization. Four different equations are set up to be tested, two of which correspond to two variants of the Marxist view, while the other two equations correspond to a naive and a sophisticated Kaleckian view, the latter being based on hysteresis. The equations are tested on three sets of annual Canadian data. Various statistical tests are applied to all four equations in an effort to rank them, notably information and encompassing tests. The Kaleckian equation with hysteresis generally comes out empirically with the preferred statistical properties, when manufacturing data on actual rates of capital accumulation are considered separately or when both realized and intended rates of investment for the total industrial sector are used.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 18 (2004)
Issue (Month): 2 ()
Pages: 127-149

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Handle: RePEc:taf:irapec:v:18:y:2004:i:2:p:127-149

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Related research

Keywords: Investment functions; post-Keynesian economics; Marxist economics; encompassing tests;

References

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Citations

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Cited by:
  1. Michalis Nikiforos, 2012. "On the Utilization Controversy: A Theoretical and Empirical Discussion of the Kaleckian Model of Growth and Distribution," Economics Working Paper Archive wp_739, Levy Economics Institute, The.
  2. Christian Schoder, 2012. "Effective demand, exogenous normal utilization and endogenous capacity in the long run. Evidence from a CVAR analysis for the US," IMK Working Paper 103-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  3. Olivier Allain & Nicolas Canry, 2008. "Growth, Capital Scrapping, and the Rate of Capacity Utilisation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00355932, HAL.
  4. Massimo Cingolani, 2008. "Full Employment as a Possible Objective for EU Policy II. Review of Some Empirical aspects," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 55(2), pages 167-184, June.
  5. Eckhard Hein & Christian Schoder, 2011. "Interest rates, distribution and capital accumulation -- A post-Kaleckian perspective on the US and Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 693-723, November.
  6. Commendatore, Pasquale & Pinto, Antonio & Sushko, Iryna, 2014. "A post-Keynesian model of growth and distribution with a constraint on investment," Structural Change and Economic Dynamics, Elsevier, vol. 28(C), pages 12-24.
  7. Robert A. Blecker, 2007. "The Economic Consequences of Dollar Appreciation for US Manufacturing Investment: A Time-Series Analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(4), pages 491-517.
  8. Hiroaki Sasaki, 2011. "Is the Long-run Equilibrium Wage-led or Profit-led? A Kaleckian Approach," Discussion papers e-11-002, Graduate School of Economics Project Center, Kyoto University.
  9. Mariolis, Theodore, 2007. "Distribution and Growth in an Economy with Heterogeneous Capital and Excess Capacity," MPRA Paper 24042, University Library of Munich, Germany.
  10. Schoder, Christian, 2011. "Kaleckian vs. Marxian specifications of the investment function: Some empirical evidence for the US," MPRA Paper 29584, University Library of Munich, Germany.
  11. Vasiliki Bozani, 2011. "NAIRU, Unemployment and Post Keynesian Economics," Working Papers 1105, University of Crete, Department of Economics.
  12. Peter Skott, 2008. "Theoretical and empirical shortcomings of the Kaleckian investment function," UMASS Amherst Economics Working Papers 2008-11, University of Massachusetts Amherst, Department of Economics, revised Dec 2009.
  13. Olivier Allain & Nicolas Canry, 2008. "Growth, Capital Scrapping, and the Rate of Capacity Utilisation," Post-Print hal-00355932, HAL.
  14. Philip Arestis & Ana Rosa González & Oscar Dejuan, 2012. "Investment, Financial Markets, and Uncertainty," Economics Working Paper Archive wp_743, Levy Economics Institute, The.
  15. Peter Skott, 2012. "Pluralism, the Lucas critique, and the integration of macro and micro," UMASS Amherst Economics Working Papers 2012-04, University of Massachusetts Amherst, Department of Economics.
  16. Sasaki, Hiroaki, 2012. "Is the long-run equilibrium wage-led or profit-led? A Kaleckian approach," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 231-244.
  17. Antoine Godin, 2012. "Guaranteed Green Jobs: Sustainable Full Employment," Economics Working Paper Archive wp_722, Levy Economics Institute, The.
  18. Peter Skott, 2008. "Growth, instability and cycles: Harrodian and Kaleckian models of accumulation and income distribution," UMASS Amherst Economics Working Papers 2008-12, University of Massachusetts Amherst, Department of Economics.
  19. Michalis Nikiforos, 2012. "The (Normal) Rate of Capacity Utilization at the Firm Level," Economics Working Paper Archive wp_737, Levy Economics Institute, The.
  20. Greg Hannsgen, 2012. "Fiscal Policy, Unemployment Insurance, and Financial Crises in a Model of Growth and Distribution," Economics Working Paper Archive wp_723, Levy Economics Institute, The.

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