Advanced Search
MyIDEAS: Login

Does financial liberalization affect the distribution of income between wages and profit ?

Contents:

Author Info

  • Domenica Tropeano

    (University of Macerata)

Abstract

Neoclassical theory says that financial liberalization will make the cost of capital decrease, productivity increase and output grow. In reality this does not happen. A key to understanding why it is so is the link between financial liberalization and income distribution. After financial liberalizations both the real interest rate and the supply of credit to the non traded goods sector rise. If the monetary interest rate and the profit rate tend to be equal in the long run, a reshuffling of production favouring the non-traded goods sector will occur; for the mark-up may be higher in this sector than in the traded goods sector�due to the lack of international competition. Households, no more credit constrained,�will increase their demand for non traded goods; profits in this sector will increase too�due to the higher capacity utilization. On the other hand the likely fall in the propensity�� to save of capitalists will cause a slower capital accumulation. Thus neither investment nor productivity will rise. This may not be due to the working of real forces alone, such as trade �liberalization, but rather to the interplay of both monetary and real factors. A vicious circle of lower growth and rising inequality could be set in motion.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.unimc.it/dief/wpaper/wpaper00024/filePaper
Download Restriction: no

Bibliographic Info

Paper provided by Macerata University, Department of Finance and Economic Sciences in its series Working Papers with number 24-2004.

as in new window
Length:
Date of creation: Oct 2004
Date of revision: Oct 2008
Publication status: Published in Economia Politica n.3 dicembre 2005 pp.439-456.
Handle: RePEc:mcr:wpdief:wpaper00024

Contact details of provider:
Postal: Via Crescimbeni, 20 -62100 Macerata
Phone: 0733.258.201
Fax: 0733.258.205
Email:
Web page: http://www.unimc.it/dief
More information through EDIRC

Related research

Keywords: Financial liberalization; Profit share; Distribution theory;

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Tropeano, Domenica & Michetti, Elisabetta, 2008. "Exchange rate policy and income distribution in an open developing economy," MPRA Paper 6642, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:mcr:wpdief:wpaper00024. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Silvana Tartufoli).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.