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The Profit-Investment-Unemployment nexus and Capacity Utilization in a Stock-Flow Consistent Model

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  • Jean-Bernard Chatelain

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper studies under which conditions the share of profit in value-added, financial constraints on investment and capital shortage may foster unemployment and may limit the growth of capital and/or the growth of aggregate demand, in a stock-flow consistent model. The efficiency of demand-side versus supply-side economic policies (decrease of the real interest rate and/or of the real wage, increase of the leverage ceiling constraint) depends on capital shortage and credit rationing, which are not necessarily simultaneous due to the effects of investment on aggregate demand and supply.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00645155.

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Date of creation: 2010
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Publication status: Published in Metroeconomica, Wiley, 2010, 61 (3), pp.454-472. <10.1111/j.1467-999X.2009.04074.x>
Handle: RePEc:hal:cesptp:hal-00645155
DOI: 10.1111/j.1467-999X.2009.04074.x
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00645155
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  1. Neri Salvadori, 2004. "Economic growth and distribution: on the nature and causes of the wealth of nations," Economics Bulletin, AccessEcon, vol. 28(18), pages A0.
  2. Jean-Bernard Chatelain & Jean-Christophe Teurlai, 2006. "Euler Investment Equation, Leverage and Cash Flow Misspecification: an Empirical Analysis on a Panel of French Manufacturing Firms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00430853, HAL.
  3. Hein, Eckhard, 2004. "Interest rate, debt, distribution and capital accumulation in a post-Kaleckian model," WSI Discussion Papers 133, Hans-Böckler-Stiftung, Wirtschafts- und Sozialwissenschaftliches Institut (WSI).
  4. Chatelain, Jean-Bernard, 2001. "Mark-up and capital structure of the firm facing uncertainty," Economics Letters, Elsevier, vol. 74(1), pages 99-105, December.
  5. Peter Skott, 2008. "Theoretical and empirical shortcomings of the Kaleckian investment function," UMASS Amherst Economics Working Papers 2008-11, University of Massachusetts Amherst, Department of Economics, revised Dec 2009.
  6. Constantinos Alexiou & Christos Pitelis, 2003. "On capital shortages and European unemployment: a panel data investigation," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 25(4), pages 613-640, July.
  7. Chatelain, Jean-Bernard, 1998. "Investment Facing Credit Rationing," The Manchester School of Economic & Social Studies, University of Manchester, vol. 66(0), pages 102-15, Supplemen.
  8. Amable, Bruno & Chatelain, Jean-Bernard & Ralf, Kirsten, 2004. "Credit rationing, profit accumulation and economic growth," Economics Letters, Elsevier, vol. 85(3), pages 301-307, December.
  9. repec:ebl:ecbull:v:28:y:2004:i:18:p:a0 is not listed on IDEAS
  10. Jean-Bernard Chatelain, 2000. "Explicit Lagrange Multiplier for Firms Facing a Debt Ceiling Constraint," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00119408, HAL.
  11. 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.
  12. Constantinos Alexiou, 2001. "Crafting a Post Keynesian Macroeconomic Framework to Explain European Unemployment: Econometric Evidence from the European Union Countries," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 24(1), pages 59-80, October.
  13. Anwar Shaikh, 2009. "Economic Policy In A Growth Context: A Classical Synthesis Of Keynes And Harrod," Metroeconomica, Wiley Blackwell, vol. 60(3), pages 455-494, 07.
  14. Philip Arestis & Michelle Baddeley & Malcolm Sawyer, 2007. "The Relationship Between Capital Stock, Unemployment And Wages In Nine Emu Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 59(2), pages 125-148, 04.
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Cited by:

  1. Asjad Naqvi, 2015. "Modeling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework," Ecological Economics Papers ieep2, Institute of Ecological Economics.
  2. Eugenio Caverzasi & Antoine Godin, 2013. "Stock-flow Consistent Modeling through the Ages," Economics Working Paper Archive wp_745, Levy Economics Institute.
  3. Antoine Godin, 2012. "Guaranteed Green Jobs: Sustainable Full Employment," Economics Working Paper Archive wp_722, Levy Economics Institute.

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