The profits-investments puzzle: A Post Keynesian-Institutional interpretation
The aim of this paper is to provide an interpretation of the so-called profits-investments puzzle, in the theoretical framework of the monetary theory of production (MTP) and with reference to ‘radical’ Institutional issues. In methodological terms, the exercise provided here is designed to graft elements of the ‘macrofoundation of microeconomics’ onto the MTP. It will be shown that investments may not increase significantly as a result of a profit increase due to the expansion of ‘unproductive consumption’ by capitalists (particularly of luxury goods). The way increasing consumption of luxury goods affects the path of investments will be analysed, under the assumption, deriving from Veblen, that capitalists are interested in competitive, conspicuous consumption.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Guglielmo Forges Davanzati & Andrea Pacella & Riccardo Realfonzo, 2009. "Fiscal policy in the monetary theory of production: an alternative to the "new consensus" approach," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(4), pages 605-621, July.
- Louis-Philippe Rochon & Mark Setterfield, 2008. "The Political Economy of Interest-Rate Setting, Inflation, and Income Distribution," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 37(2), pages 5-25, July.
- John Cummings, 1899. "The Theory of the Leisure Class," Journal of Political Economy, University of Chicago Press, vol. 7, pages 425.
- Linwood Tauheed & L. Randall Wray, 2006. "System Dynamics of Interest Rate Effects on Aggregate Demand," Chapters, in: Money, Financial Instability and Stabilization Policy, chapter 3 Edward Elgar.
- Edwin Le Heron & Tarik Mouakil, 2008. "A Post-Keynesian Stock-Flow Consistent Model For Dynamic Analysis Of Monetary Policy Shock On Banking Behaviour," Metroeconomica, Wiley Blackwell, vol. 59(3), pages 405-440, 07.
- Thomas I. Palley, 2007.
"Financialization: What It Is and Why It Matters,"
Economics Working Paper Archive
wp_525, Levy Economics Institute.
- Thomas I. Palley, 2007. "Financialization: What It Is and Why It Matters," Working Papers wp153, Political Economy Research Institute, University of Massachusetts at Amherst.
- Thomas I. Palley, 2008. "Financialization: What it is and Why it Matters," IMK Working Paper 04-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Guglielmo Forges Davanzati & Andrea Pacella, 2010. "Emulation, indebtedness and income distribution: A monetary theory of production approach," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 7(1), pages 147-165.
- Andrea Pacella, 2009. "The Effects of Employment Insecurity on Demand, Productivity and Employment Levels," Review of Political Economy, Taylor & Francis Journals, vol. 21(2), pages 273-289.
- Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
- Alvaro Angeriz & Philip Arestis, 2009. "The consensus view on interest rates and fiscal policy: reality or innocent fraud?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(4), pages 567-586, July.
- Engelbert Stockhammer & Paul Ramskogler, 2007. "Uncertainty and exploitation in history," Department of Economics Working Papers wuwp104, Vienna University of Economics and Business, Department of Economics.
- Mark Setterfield, 2009. "Fiscal and monetary policy interactions: lessons for revising the EU Stability and Growth Pact," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(4), pages 623-643, July.
- Gilberto Tadeu Lima & Mark Setterfield, 2010. "Pricing Behaviour and the Cost-Push Channel of Monetary Policy," Review of Political Economy, Taylor & Francis Journals, vol. 22(1), pages 19-40.
- Graziani,Augusto, 2003. "The Monetary Theory of Production," Cambridge Books, Cambridge University Press, number 9780521812115.
- Andrea Pacella, 2008. "The Effects Of Labour Market Flexibility In The Monetary Theory Of Production," Metroeconomica, Wiley Blackwell, vol. 59(4), pages 608-632, November.
- Dora M. Iakova, 2007. "Flattening of the Phillips Curve: Implications for Monetary Policy," IMF Working Papers 07/76, International Monetary Fund.
- Anastasia Guscina, 2006. "Effects of Globalization on Laborâ€™s Share in National Income," IMF Working Papers 06/294, International Monetary Fund.
- Thomas Palley, 1997. "Endogenous money and the business cycle," Journal of Economics, Springer, vol. 65(2), pages 133-149, June.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Adil H. Mouhammed, 1999. "Veblen and Keynes on the Economic Theory of the Capitalist Economy," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 594-, December.
- Paul Ramskogler, 2011. "Credit Money, Collateral and the Solvency of Banks: A Post Keynesian Analysis of Credit Market Failures," Review of Political Economy, Taylor & Francis Journals, vol. 23(1), pages 69-79.
- Emiliano Brancaccio, 2008. "Deficit commerciale, crisi di bilancio e politica deflazionista," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2008(96), pages 109-128.
When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:26:y:2013:i:c:p:1-13. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.