Monetary interest rates, income shares, and investment: Theory and empirical evidence for France, Germany, the UK, and the USA
AbstractMonetary analysis requires the introduction of monetary variables into the determination of the equilibrium values of real variables such as production, income, distribution, and accumulation. Contrary to Keynes's research program of a 'monetary theory of production', neither the older post-Keynesian models of growth and distribution (Kaldor, J. Robinson) nor the models based on the work by Kalecki and Steindl take account of monetary variables in a sufficient way. Starting from a Kaleckian effective demand model by Bhaduri & Marglin, the first part of this paper deals with the effects of an exogenous variation in the monetary interest rate on the real equilibrium position of the economic system. Different regimes of accumulation are derived and it is shown that a negative relation between the interest rate and the equilibrium rates of capacity utilisation, accumulation and profit usually expected in post-Keynesian theory only exists under special conditions. The second part of the paper applies the model to the data of some major OECD-countries and studies the effects of the monetary interest rate on distribution and investment within different regimes of accumulation, the 'golden age'- and the 'post-golden-age'-'social structure of accumulation'. This discussion also gives an explanation for stagnating capital formation and rising unemployment since the mid 1970s. --
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Bibliographic InfoPaper provided by Promotionsschwerpunkt "Globalisierung und Beschaeftigung" in its series Violette Reihe Arbeitspapiere with number 11/2000.
Date of creation: 2000
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Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
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- Hein, Eckhard, 2001.
"Institutions and macroeconomic performance: Central bank independence, labour market institutions and the perspectives for inflation and employment in the European Monetary Union,"
WSI Discussion Papers
95, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
- Hein, Eckhard, 2001. "Institutions and Macroeconomic Performance: Central Bank Independence, Labour Market Institutions and the Perspectives for Inflation and Employment in the European Monetary Union," MPRA Paper 18880, University Library of Munich, Germany.
- Hein, Eckhard, 2002. "Money, interest, and capital accumulation in Karl Marx's economics: A monetary interpretation," WSI Discussion Papers 102, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
- Eckhard Hein, 2005. "Money, Interest, and Capital Accumulation in Karl Marx’s," Method and Hist of Econ Thought 0501002, EconWPA.
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