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Ricardian Debt/Taxation Equivalence in the Kaldor Theory of Profits and Income Distribution

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  • Pasinetti, Luigi L

Abstract

A well-known characteristic of Nicholas Kaldor's theory of income distribution (and of the related "Cambridge Theory" of the rate of profits) is that any tax imposed on profits is shifted on to wages, in analogy (but with a reversal of the causation chain) with David Ricardo's theory of income distribution, in which any tax imposed on wages is shifted on to profits. The present paper explores the conditions under which the same property holds when government expenditure is financed by a budget deficit, and the conclusion is reached that such conditions coincide with those that assure "Ricardian equivalence" between public indebtment and taxation. Copyright 1989 by Oxford University Press.

Suggested Citation

  • Pasinetti, Luigi L, 1989. "Ricardian Debt/Taxation Equivalence in the Kaldor Theory of Profits and Income Distribution," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(1), pages 25-36, March.
    • Handle: RePEc:oup:cambje:v:13:y:1989:i:1:p:25-36
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    Cited by:

    1. Javier López-Bernardo & Félix López-Martínez & Engelbert Stockhammer, 2016. "A Post-Keynesian Response to Piketty's ‘Fundamental Contradiction of Capitalism’," Review of Political Economy, Taylor & Francis Journals, vol. 28(2), pages 190-204, April.
    2. Ali, Amjad, 2016. "Issue of Income Inequality under the perceptive of Macroeconomic Instability: An Empirical Analysis of Pakistan," MPRA Paper 74963, University Library of Munich, Germany.
    3. Joanílio Rodolpho Teixeira, 2009. "Growth, Distribution, Stability and Government Budget Surplus: The Extended Cambridge Equation Revisited," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 10(2), pages 239-251.
    4. Javier López Bernardo & Engelbert Stockhammer & Félix López Martínez, 2016. "A post Keynesian theory for Tobin’s in a stock-flow consistent framework," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 39(2), pages 256-285, April.
    5. João Gabriel de Araujo Oliveira & Joanilio Rodolpho Teixeira, 2020. "A note reconsidering a post‐Keynesian model of growth and distribution in the globalization context," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 487-495, July.
    6. Jamee K. Moudud, 2010. "Strategic Competition, Dynamics, and the Role of the State," Books, Edward Elgar Publishing, number 4241.
    7. Joao Ricardo Faria & Ricardo Azevedo Araujo, 2004. "An Intertemporal Pasinettian Model with Government Sector," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 3(3), pages 257-268, December.
    8. Saeed, Khalid & Prankprakma, Ponthep, 1997. "Technological development in a dual economy: Alternative policy levers for economic development," World Development, Elsevier, vol. 25(5), pages 695-712, May.
    9. Baranzini, Mauro L. & Mirante, Amalia, 2021. "Pasinetti's theorem: A narrow escape, for what was to become an inexhaustible research programme," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 470-481.
    10. Faria, Joao Ricardo, 2000. "A two-class fiscal and monetary growth model," Structural Change and Economic Dynamics, Elsevier, vol. 11(3), pages 355-364, September.

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