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Kaleckian Models of Growth in a Stock-Flow Monetary Framework: A Neo-Kaldorian Model

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Author Info
Marc Lavoie (University of Ottawa)
Wynne Godley (The Jerome Levy Economics Institute)

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Abstract

This paper presents a simple growth model grounded in a stock-flow monetary accounting framework. The framework ensures that all stocks and flows are accounted for and that the real and financial sides of the economy are coherent with one another. Credit, money, equities, and stocks of real capital link periods of time with one another in articulated sequences. Wealth is allocated between assets on Tobinesque principles but no equilibrium condition is necessary to bring the "demand" for money into equivalence with its "supply." Growth and profit rates, as well as valuation, debt, and capacity utilization ratios, are analysed using simulations in which a growing economy is assumed to be shocked by changes in interest rates liquidity preference, real wages, and the parameters that determine how firms finance investment.

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Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number 0004049.

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Length: 22 pages
Date of creation: 25 Oct 2000
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Handle: RePEc:wpa:wuwpma:0004049

Note: Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 22; figures: included
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Find related papers by JEL classification:
E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dumenil, Gerard & Levy, Dominique, 1999. "Being Keynesian in the Short Term and Classical in the Long Term: The Traverse to Classical Long-Term Equilibrium," Manchester School, University of Manchester, vol. 67(6), pages 684-716, December. [Downloadable!] (restricted)
  2. Lavoie, Marc, 1999. "The Credit-Led Supply of Deposits and the Demand for Money: Kaldor's Reflux Mechanism as Previously Endorsed by Joan Robinson," Cambridge Journal of Economics, Oxford University Press, vol. 23(1), pages 103-13, January.
  3. Jamee K. Moudud, 1999. "Finance in a Classical and Harrodian Cyclical Growth Model," Economics Working Paper Archive 290, Levy Economics Institute, The. [Downloadable!]
  4. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-93, December.
  5. Basil J. Moore, 1973. "Some Macroeconomic Consequences of Corporate Equities," Canadian Journal of Economics, Canadian Economics Association, vol. 6(4), pages 529-44, November. [Downloadable!] (restricted)
  6. Lavoie, Marc, 1996. "Horizontalism, Structuralism, Liquidity Preference and the Principle of Increasing Risk," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(3), pages 275-300, August.
  7. Marc Lavoie, 1998. "The Neo-Pasinetti Theorem in Cambridge and Kaleckian Models of Growth and Distribution," Eastern Economic Journal, Eastern Economic Association, vol. 24(4), pages 417-434, Fall. [Downloadable!]
  8. Chick, Victoria, 1995. "Is There a Case for Post Keynesian Economics?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 42(1), pages 20-36, February.
  9. Marris, Robin, 1972. "Why Economics Needs a Theory of the Firm," Economic Journal, Royal Economic Society, vol. 82(325), pages 321-52, Supplemen. [Downloadable!] (restricted)
  10. Skott, Peter, 1988. "Finance, Saving and Accumulation," Cambridge Journal of Economics, Oxford University Press, vol. 12(3), pages 339-54, September.
  11. repec:cup:cbooks:9780521066310 is not listed on IDEAS
  12. Skott, Peter, 1981. "On the 'Kaldorian' Saving Function," Kyklos, Blackwell Publishing, vol. 34(4), pages 563-81.
  13. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-15, March. [Downloadable!] (restricted)
  14. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February. [Downloadable!] (restricted)
  15. Godley, Wynne, 1999. "Money and Credit in a Keynesian Model of Income Determination," Cambridge Journal of Economics, Oxford University Press, vol. 23(4), pages 393-411, July.
  16. Panico, Carlo, 1997. "Government Deficits in Post-Keynesian Theories of Growth and Distribution," Contributions to Political Economy, Oxford University Press, vol. 16(0), pages 61-86.
  17. Taylor, Lance & O'Connell, Stephen A, 1985. "A Minsky Crisis," The Quarterly Journal of Economics, MIT Press, vol. 100(5), pages 871-85, Supp.. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Peter Skott, 2008. "Theoretical and empirical shortcomings of the Kaleckian investment function," Working Papers 2008-11, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  2. Alex Izurieta, 2001. "Can Countries under A Common Currency Conduct Their Own Fiscal Policies?," Macroeconomics 0108008, EconWPA. [Downloadable!]
  3. Eckhard Hein, 2005. "Interest, debt and capital accumulation - a Kaleckian approach," Macroeconomics 0510007, EconWPA. [Downloadable!]
    Other versions:
  4. Eckhard Hein, 2008. "Shareholder value orientation, distribution and growth – short- and medium-run effects in a Kaleckian model," Department of Economics Working Papers wuwp120, Vienna University of Economics and B.A., Department of Economics. [Downloadable!]
  5. Eckhard Hein & Till van Treeck, 2007. "'Financialisation' in Kaleckian/Post-Kaleckian models of distribution and growth," IMK Working Paper 07-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  6. Peter Skott, 2008. "Growth, instability and cycles: Harrodian and Kaleckian models of accumulation and income distribution," Working Papers 2008-12, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  7. Alex Izurieta, 2001. "Can Countries under A Common Currency Conduct Their Own Fiscal Policies?," Economics Working Paper Archive 337, Levy Economics Institute, The. [Downloadable!]
  8. Marc Lavoie, 2001. "Endogenous Money in a Coherent Stock-Flow Framework," Macroeconomics 0103007, EconWPA. [Downloadable!]
    Other versions:
  9. Man-Seop Park, 2004. "Credit money and Kaldor's 'institutional' theory of income distribution," Review of Political Economy, Taylor and Francis Journals, vol. 16(1), pages 79-99, January. [Downloadable!] (restricted)
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