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A (Post-) Keynesian perspective on "financialisation"

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Author Info
Eckhard Hein () (Macroeconomic Policy Institute (IMK) at Hans Boeckler Foundation, Duesseldorf)

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Abstract

Post-Keynesian demand driven distribution and growth models, based on the notion of distribution conflict between different groups, have been critical regarding the macroeconomic effects of 'financialisation'. In the present paper, firstly, we attempt to identify theoretically and empirically the main channels of influence of 'financialisation' on investment, saving and distribution in order to obtain a precise macroeconomic meaning of 'financialisation' in a distribution and growth context. Secondly, we analyse the effects of 'financialisation' in a simple stock-flow consistent Post-Keynesian/Post-Kaleckian distribution and growth model and we show that with 'normal' parameter constellations 'financialisation' generates systemic instability.

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Paper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Studies with number 01-2009.

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Length: 59 pages
Date of creation: 2009
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Handle: RePEc:imk:studie:01-2009

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