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Schumpeter in a matrix: a Stock Flow Consistent analysis of technological change

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Author Info

  • Alessandro Caiani

    ()
    (Department of Economics and Business, University of Pavia)

  • Antoine Godin

    (Department of Economics and Business, University of Pavia)

  • Stefano Lucarelli

    (Department of Economics “Hyman P. Minsky”, University of Bergamo)

Abstract

Schumpeter showed that the boom and bust cycles are intrinsically related to the functioning of the capitalist economy. These boom and bust cycles are inherent to the rise innovation. Our paper analyses innovation cycles in a stock flow consistent framework. It focuses on the essential role of internal and external finance in the emergence of a new technological paradigm. We present two models. The first one, as a tribute to Schumpeter’s work, follows strictly Schumpeter’s description of the business cycles induced by technological change, except for the financial side. The second model presents a multi-sectorial economy composed of consumption and capital goods industries, a banking sector and two households sectors: capitalists and wage earners. The stock flow consistent approach allows us to track the flows of funds resulting from the rise of innovators in the system. The dynamics of prices, employment and wealth distribution among the different sectors is analysed. Above all, the role of financial-innovation nexus is underlined. The paper builds the grounds for a wider analysis of schumpeterian structural changes described in Schumpeter (1934/1912) and Schumpeter (1964/1939) We find this particularly relevant to understand the impact and potential sources of instability of an ever more financialized monetary economy of production.

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File URL: http://economia.unipv.it/docs/dipeco/quad/ps/RePEc/pav/wpaper/q175.pdf
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Bibliographic Info

Paper provided by University of Pavia, Department of Economics and Quantitative Methods in its series Quaderni di Dipartimento with number 175.

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Length: 44 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:pav:wpaper:175

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Keywords: Schumpeter; Innovation; Stock Flow Consistent Models; Monetary Circuit;

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References

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  1. Edwin Le Heron & Tarik Mouakil, 2008. "A Post-Keynesian Stock-Flow Consistent Model For Dynamic Analysis Of Monetary Policy Shock On Banking Behaviour," Metroeconomica, Wiley Blackwell, vol. 59(3), pages 405-440, 07.
  2. Carlota Perez, 2009. "The double bubble at the turn of the century: technological roots and structural implications," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 779-805, July.
  3. Bhaduri, Amit, 1972. "Unwanted Amortisation Funds," Economic Journal, Royal Economic Society, vol. 82(326), pages 674-77, June.
  4. Gennaro Zezza, 2004. "Some Simple, Consistent Models of the Monetary Circuit," Economics Working Paper Archive wp_405, Levy Economics Institute.
  5. Marc Lavoie & Wynne Godley, 2000. "Kaleckian Models of Growth in a Stock-Flow Monetary Framework: A Neo-Kaldorian Model," Macroeconomics 0004049, EconWPA.
  6. repec:rtv:ceiswp:169 is not listed on IDEAS
  7. James R. Brown & Steven M. Fazzari & Bruce C. Petersen, 2009. "Financing Innovation and Growth: Cash Flow, External Equity, and the 1990s R&D Boom," Journal of Finance, American Finance Association, vol. 64(1), pages 151-185, 02.
  8. Carlota Perez, 2010. "Technological revolutions and techno-economic paradigms," Cambridge Journal of Economics, Oxford University Press, vol. 34(1), pages 185-202, January.
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Cited by:
  1. Alessandro Caiani & Antoine Godin & Stefano Lucarelli, 2013. "Innovation and Finance: A Stock Flow Consistent Analysis of Great Surges of Development," INET Research Notes 34, Institute for New Economic Thinking (INET).

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