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On the ‘utilisation controversy’: a theoretical and empirical discussion of the Kaleckian model of growth and distribution

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  • Michalis Nikiforos

Abstract

This paper examines the ‘utilisation controversy’ around the Kaleckian model of growth and distribution. We show that the Federal Reserve data on capacity utilisation, which have been used by both sides of this debate, are the wrong kind of data for the issue under examination. Instead, a more appropriate measurement can be derived from the data on the average workweek of capital. We argue that the long-run dynamic adjustment, proposed by Kaleckian scholars, lacks a coherent economic rationale. We provide an alternative path towards the endogeneity of the desired utilisation at the micro and macro levels. Finally, we examine the proposed adjustment mechanism econometrically. Our results verify the endogeneity of the normal utilisation rate.

Suggested Citation

  • Michalis Nikiforos, 2016. "On the ‘utilisation controversy’: a theoretical and empirical discussion of the Kaleckian model of growth and distribution," Cambridge Journal of Economics, Oxford University Press, vol. 40(2), pages 437-467.
  • Handle: RePEc:oup:cambje:v:40:y:2016:i:2:p:437-467.
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    File URL: http://hdl.handle.net/10.1093/cje/beu076
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    Cited by:

    1. Ítalo Pedrosa & Dany Lang, 2018. "Heterogeneity, distribution and financial fragility of non-financial firms: an agent-based stock-flow consistent (AB-SFC) model," CEPN Working Papers hal-01937186, HAL.
    2. Marwil J. Dávila-Fernández & Serena Sordi, 2017. "Distributive cycles and endogenous technical change in a BoPC growth model," Department of Economics University of Siena 760, Department of Economics, University of Siena.
    3. repec:bla:metroe:v:68:y:2017:i:1:p:194-199 is not listed on IDEAS
    4. Guilherme Klein Martins & Fernando Rugitsky, 2018. "The commodities boom and the profit squeeze: output and profit cycles in Brazil (1996-2016)," Working Papers, Department of Economics 2018_09, University of São Paulo (FEA-USP).
    5. Michaelis Nikiforos, 2018. "Distribution-led growth through methodological lenses," FMM Working Paper 24-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Pariboni, Riccardo & Girardi, Daniele, 2018. "A(nother) Note on the Inconsistency of Neo-Kaleckian Growth Models," Centro Sraffa Working Papers CSWP31, Centro di Ricerche e Documentazione "Piero Sraffa".
    7. Daniele Girardi & Riccardo Pariboni, 2018. "Normal utilization as the adjusting variable in Neo-Kaleckian growth models : a critique," UMASS Amherst Economics Working Papers 2018-11, University of Massachusetts Amherst, Department of Economics.
    8. Italo Pedrosa & Dany Lang, 2018. "Heterogeneity, distribution and financial fragility of non-financial firms: an agent-based stock-flow consistent (AB-SFC) model," CEPN Working Papers 2018-11, Centre d'Economie de l'Université de Paris Nord.
    9. Santiago J. Gahn & Alejandro González, 2018. "On the “utilisation controversy”: a comment," Working Papers PKWP1814, Post Keynesian Economics Society (PKES).

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