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

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  • Marc Lavoie

    (University of Ottawa)

  • Wynne Godley

    (The Jerome Levy Economics Institute)

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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Bibliographic 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
Date of revision:
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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Web page: http://128.118.178.162

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  1. 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.
  2. 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.
  3. James R. Crotty, 1996. "Is New Keynesian Investment Theory Really "Keynesian"? Reflections on Fazzari and Variato," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 18(3), pages 333-357, April.
  4. 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.
  5. 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.
  6. Marris, Robin, 1972. "Why Economics Needs a Theory of the Firm," Economic Journal, Royal Economic Society, vol. 82(325), pages 321-52, Supplemen.
  7. 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.
  8. Lavoie, M. & Seccareccia, M., 1999. "Minsky's Financial Fragility Hypothesis: a Missing Macroeconomic Link?," Working Papers 9904e, University of Ottawa, Department of Economics.
  9. Skott, Peter, 1981. "On the 'Kaldorian' Saving Function," Kyklos, Wiley Blackwell, vol. 34(4), pages 563-81.
  10. Skott,Peter, 2008. "Conflict and Effective Demand in Economic Growth," Cambridge Books, Cambridge University Press, number 9780521066310.
  11. 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.
  12. Amitava Krishna Dutt, 1995. "Internal Finance And Monopoly Power In Capitalist Economies: A Reformulation Of Steindl'S Growth Model," Metroeconomica, Wiley Blackwell, vol. 46(1), pages 16-34, 02.
  13. 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.
  14. Lewis, Mervyn K. & Mizen, Paul D., 2000. "Monetary Economics," OUP Catalogue, Oxford University Press, number 9780198290629, September.
  15. Leonce Ndikumana, 1999. "Debt Service, Financing Constraints, and Fixed Investment: Evidence from Panel Data," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 21(3), pages 455-478, April.
  16. Martin H. Wolfson, 1996. "A Post Keynesian Theory of Credit Rationing," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 18(3), pages 443-470, April.
  17. 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.
  18. Skott, Peter, 1988. "Finance, Saving and Accumulation," Cambridge Journal of Economics, Oxford University Press, vol. 12(3), pages 339-54, September.
  19. Basil J. Moore, 1973. "Some Macroeconomic Consequences of Corporate Equities," Canadian Journal of Economics, Canadian Economics Association, vol. 6(4), pages 529-44, November.
  20. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-15, March.
  21. Lavoie, M, 1995. "The Neo-Painetti Theorem in Cambridgian and Keleckian Models of Growth and Distribution," Working Papers 9518e, University of Ottawa, Department of Economics.
  22. 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.
  23. Taylor, Lance & O'Connell, Stephen A, 1985. "A Minsky Crisis," The Quarterly Journal of Economics, MIT Press, vol. 100(5), pages 871-85, Supp..
  24. Jamee K. Moudud, 1999. "Finance in a Classical and Harrodian Cyclical Growth Model," Economics Working Paper Archive wp_290, Levy Economics Institute.
  25. Wynne Godley, 1996. "Money, Finance and National Income Determination: An Integrated Approach," Economics Working Paper Archive wp_167, Levy Economics Institute.
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