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On the Short-run Relationship between the Income Distribution- and Finance-Growth Regimes

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  • Hiroshi Nishi

Abstract

This paper examines the short-run relationship between the income distributionand finance-growth regimes using a simple post-Keynesian demand-driven model. While each mechanism of wage-led and profit-led growth has been revealed, its relationship with debt-led and debt-burdened growth, and vice versa, is yet to be clarified. This is because the argument on these growth regimes has been developed separately. By constructing a simple post-Keynesian model that generates these regimes, this paper examines their relationship. It is shown that the growth regimes transform as the regime switching parameters in the IS balance change. By way of theoretical analysis, this paper presents some important implications for the diversity of economic growth—including the complementarity of growth regimes to shocks—that are in contrast to the implications of the basic neo-classical model on income distribution and money. In addition, by doing so, this paper also validates recent empirical results.

Suggested Citation

  • Hiroshi Nishi, 2012. "On the Short-run Relationship between the Income Distribution- and Finance-Growth Regimes," Discussion papers e-12-001, Graduate School of Economics Project Center, Kyoto University.
  • Handle: RePEc:kue:dpaper:e-12-001
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    1. Gilberto Tadeu Lima & Antonio J. A. Meirelles, 2007. "Macrodynamics of debt regimes, financial instability and growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(4), pages 563-580, July.
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    4. Hiroaki Sasaki, 2011. "Conflict, growth, distribution, and employment: a long-run Kaleckian model," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(5), pages 539-557, September.
    5. Eckhard Hein & Christian Schoder, 2011. "Interest rates, distribution and capital accumulation -- A post-Kaleckian perspective on the US and Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 693-723, November.
    6. Mario Cassetti, 2003. "Bargaining power, effective demand and technical progress: a Kaleckian model of growth," Cambridge Journal of Economics, Oxford University Press, vol. 27(3), pages 449-464, May.
    7. Hiroshi Nishi, 2012. "Structural VAR analysis of debt, capital accumulation, and income distribution in the Japanese economy: a Post Keynesian perspective," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(4), pages 685-712.
    8. Stockhammer, Engelbert & Onaran, Ozlem, 2004. "Accumulation, distribution and employment: a structural VAR approach to a Kaleckian macro model," Structural Change and Economic Dynamics, Elsevier, vol. 15(4), pages 421-447, December.
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    11. Nelson H. Barbosa-Filho & Lance Taylor, 2006. "Distributive And Demand Cycles In The Us Economy-A Structuralist Goodwin Model," Metroeconomica, Wiley Blackwell, vol. 57(3), pages 389-411, July.
    12. Sébastien Charles, 2008. "Corporate debt, variable retention rate and the appearance of financial fragility," Cambridge Journal of Economics, Oxford University Press, vol. 32(5), pages 781-795, September.
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    16. Robert A. Blecker, 2010. "Open economy models of distribution and growth," Working Papers 2010-03, American University, Department of Economics.
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    More about this item

    Keywords

    Wage- and Profit-led Growth; Debt-led and Debt-burdened Growth; Post-Keynesian model;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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