Money and distribution: can the theory explain recent empirical trends?
AbstractThe paper examines some trends in the distribution of income that have prevailed in thelast two decades, in particular the opposite tendencies to a fall in the wage share and an�increase in the profit and rent share. Moreover both profit rates and real interest rates have�increased in OECD countries. Some theoretical models are examined to see whether they�may explain those tendencies. The focus is on models in the Keynesian-Kaleckian tradition.�In those models it is possible, for some combinations of parameters, that an increase�in real interest rates may lead to an increase in profit rates. Unfortunately, however, those�values of parameters which would be required and which correspond to assumptions on the�� behaviour of agents, do not reflect historical values. Thus, though Kaleckian-Keynesian�models may offer an explanation of these trends, this explanation does not seem to apply�� to the recent history of OECD countries. Another strand of literature is also examined�which goes back to Sraffa and the monetary theory of distribution. The two approaches�are compared. The paper also looks for the possibility of a synthesis.
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Bibliographic InfoPaper provided by Macerata University, Department of Finance and Economic Sciences in its series Working Papers with number 31-2006.
Date of creation: Oct 2006
Date of revision: Oct 2008
rate of profit; Distribution theory; Monetary theory;
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- Marc Lavoie, 1995.
"Interest Rates In Post-Keynesian Models Of Growth And Distribution,"
Wiley Blackwell, vol. 46(2), pages 146-177, 06.
- Lavoie, M., 1993. "Interest Rates in Post-Keynesian Models of Growth and Distribution," Working Papers 9314e, University of Ottawa, Department of Economics.
- Harrison, Ann, 2005. "Has Globalization Eroded Labor’s Share? Some Cross-Country Evidence," MPRA Paper 39649, University Library of Munich, Germany.
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