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Conflict in the profit-led growth model

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  • Correa, Romar

Abstract

We model the interaction between capitalists and entrepreneurs as a dynamic game. The open-loop Nash equilibrium and the closed-loop Nash equilibrium are distinguished. The purpose is to answer some questions that have arisen in the development of profit-led versus wage-led growth models. We find that the rate of profit and the discount rate as well as the responsiveness of the wage rate or aggregate consumption to the accumulation of capital are critical to explaining the change in regimes.

Suggested Citation

  • Correa, Romar, 2015. "Conflict in the profit-led growth model," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-9.
    • Handle: RePEc:zbw:ifweej:20156
    DOI: 10.5018/economics-ejournal.ja.2015-6
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    References listed on IDEAS

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    1. Setterfield, Mark & Kim, Yun K., 2016. "Debt servicing, aggregate consumption, and growth," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 22-33.
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    3. Lance Taylor, 2014. "The Triumph of the Rentier? Thomas Piketty vs. Luigi Pasinetti and John Maynard Keynes," International Journal of Political Economy, Taylor & Francis Journals, vol. 43(3), pages 4-17, July.
    4. Barry Z. Cynamon & Steven M. Fazzari, 2013. "Inequality and Household Finance during the Consumer Age," Economics Working Paper Archive wp_752, Levy Economics Institute.
    5. Engelbert Stockhammer & Ozlem Onaran, 2013. "Wage-led growth: theory, evidence, policy," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 61-78, January.
    6. Jakob Kapeller & Bernhard Schütz, 2015. "Conspicuous Consumption, Inequality and Debt: The Nature of Consumption-driven Profit-led Regimes," Metroeconomica, Wiley Blackwell, vol. 66(1), pages 51-70, February.
    7. Kim, Jaehoon & Kim, Sangsin, 2015. "2012년 국회법 개정의 효과 연구 [A Study on the Effect of the 2012 National Assembly Act Amendment]," KDI Research Monographs, Korea Development Institute (KDI), volume 127, number v:2015-03(k):y:2015:p:1-1.
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    More about this item

    Keywords

    capital accumulation; rentier consumption;

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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