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Shareholder value orientation, distribution and growth – short- and medium-run effects in a Kaleckian model

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

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Abstract

We discuss the effects of rising shareholder power on distribution and capital accumulation in a Kaleckian model. Increasing shareholder power is associated with decreasing managements’ animal spirits, on the one hand, and increasing dividends distributed to shareholders, on the other hand. In the short run, increasing shareholder power may either have positive (‘finance-led’), negative (‘normal’) or intermediate (‘profits without investment’) effects on capacity utilisation, profits and capital accumulation. In the medium run, the positive (‘finance-led’) effects may be maintained in a stable environment under very special conditions, whereas the negative (‘normal’) and the intermediate (‘profits without investment’) effects turn into cumulative disequilibrium processes with falling rates of capacity utilisation, profits and capital accumulation and rising debt- and rentiers’ equity-capital-ratios.

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Paper provided by Vienna University of Economics and B.A., Department of Economics in its series Department of Economics Working Papers with number wuwp120.

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Date of creation: Mar 2008
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Handle: RePEc:wiw:wiwwuw:wuwp120

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Find related papers by JEL classification:
E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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