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Financialisation in a comparative static, stock-flow consistent Post-Kaleckian distribution and growth model

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  • Eckhard Hein

    ()
    (Macroeconomic Policy Institute (IMK) at Hans Boeckler Foundation, Duesseldorf)

Abstract

Into an analytical stock-flow consistent Post-Kaleckian distribution and growth model the following transmission channels of 'financialisaton' are integrated. 1. 'Financialisation' is assumed to affect distribution between firms and rentiers in the short run, and distribution between capital and labour through a dividend-elastic mark-up in firms' price setting in the medium run. 2. Firms' investment is affected through a 'management's preference channel' and an 'internal means of finance channel'. 3. Consumption is influenced via distribution of dividends in the short run and via a reduction in the labour income share in the medium run. In the model the total effect of 'financialisation' is derived, the development of firms' outside finance-capital ratio is endogenised, and the medium-run stability and viability of the financial structure and of capital accumulation is checked.

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Bibliographic Info

Paper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Working Paper with number 21-2008.

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Length: 23 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:imk:wpaper:21-2008

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Keywords: 'Financialisation'; distribution; growth; instability; Post-Kaleckian model;

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References

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  1. Engelbert Stockhammer, 2004. "Financialisation and the slowdown of accumulation," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 28(5), pages 719-741, September.
  2. Eckhard Hein, 2008. "Shareholder value orientation, distribution and growth – short- and medium-run effects in a Kaleckian model," Department of Economics Working Papers wuwp120, Vienna University of Economics, Department of Economics.
  3. Thomas I. Palley, 1994. "Debt, Aggregate Demand, and the Business Cycle: An Analysis in the Spirit of Kaldor and Minsky," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 16(3), pages 371-390, April.
  4. Petra Dünhaupt & Eckhard Hein & Till van Treeck, 2007. "Finanzsystem und wirtschaftliche Entwicklung: Tendenzen in den USA und in Deutschland aus makroökonomischer Perspektive," IMK Studies 05-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  5. Amit Bhaduri & Kazimierz Laski & Martin Riese, 2006. "A Model Of Interaction Between The Virtual And The Real Economy," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 412-427, 07.
  6. Eckhard Hein & Till van Treeck, 2008. "'Financialisation' in Post-Keynesian models of distribution and growth - a systematic review," IMK Working Paper, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute 10-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  7. Craig Medlen, 2003. "The trouble with Q," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 25(4), pages 693-698, July.
  8. Till van Treeck, 2008. "Reconsidering The Investment-Profit Nexus In Finance-Led Economies: An Ardl-Based Approach," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 59(3), pages 371-404, 07.
  9. Özgür Orhangazi, 2007. "Financialization and Capital Accumulation in the Non-Financial Corporate Sector," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp149, Political Economy Research Institute, University of Massachusetts at Amherst.
  10. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 14(4), pages 375-93, December.
  11. Marc Lavoie, 1995. "Interest Rates In Post-Keynesian Models Of Growth And Distribution," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 46(2), pages 146-177, 06.
  12. Amitava Krishna Dutt, 2006. "Maturity, Stagnation And Consumer Debt: A Steindlian Approach," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 339-364, 07.
  13. Peter Skott & Soon Ryoo, 2008. "Macroeconomic implications of financialisation," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 32(6), pages 827-862, November.
  14. James R. Crotty, 1990. "Owner-Manager Conflict and Financial Theories of Investment Instability: A Critical Assessment of Keynes, Tobin, and Minsky," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 12(4), pages 519-542, July.
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Cited by:
  1. Peter Skott, 2013. "Increasing Inequality and Financial Instability," Review of Radical Political Economics, Union for Radical Political Economics, Union for Radical Political Economics, vol. 45(4), pages 478-488, December.
  2. Peter Skott, 2011. "Heterodox macro after the crisis," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2011-23, University of Massachusetts Amherst, Department of Economics.

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