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

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  • Eckhard Hein

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

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, 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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Citations

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Cited by:
  1. Eckhard Hein, 2012. "Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model," PSL Quarterly Review, Economia civile, vol. 65(260), pages 11-51.
  2. Georgios Argitis & Stella Michopoulou, 2011. "Are Full Employment and Social Cohesion Possible Under Financialization?," Forum for Social Economics, Taylor & Francis Journals, vol. 40(2), pages 139-155, January.
  3. Hein, Eckhard, 2009. "Financialisation', distribution, capital accumulation and productivity growth in a Post-Kaleckian model," IPE Working Papers 01/2009, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  4. Shinya Fujita & Hiroaki Sasaki, 2011. "Financialization and its Long-run Macroeconomic Effects in a Kalecki-Minsky Model," Discussion papers e-11-001, Graduate School of Economics Project Center, Kyoto University.
  5. Hein, Eckhard, 2011. "Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies," MPRA Paper 31180, University Library of Munich, Germany.
  6. Hein, Eckhard & Truger, Achim, 2010. "Finance-dominated capitalism in crisis: The case for a Global Keynesian New Deal," IPE Working Papers 06/2010, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  7. Hiroaki Sasaki & Shinya Fujita, 2012. "Income Distribution, Debt Accumulation, and Financial Fragility in a Kaleckian Model with Labor Supply Constraints," Discussion papers e-12-007, Graduate School of Economics Project Center, Kyoto University.
  8. Antonio Bianco & Paolo M. Piacentini, 2013. "The sustainability of a creative-finance-led economy," Working papers wpaper07, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
  9. Hiroaki Sasaki & Shinya Fujita, 2010. "The Importance of the Retention Ratio in a Kaleckian Model with Debt Accumulation," Discussion papers e-10-008, Graduate School of Economics Project Center, Kyoto University.
  10. Eckhard Hein, 2009. "‘Financialisation’ in a comparative static, stock-flow consistent post-kaleckian distribution and growth model," EKONOMIAZ, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 72(03), pages 120-139.

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