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Kaleckian Models of Growth in a Stock-Flow Monetary Framework: A Neo-Kaldorian Model

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  • Marc Lavoie
  • Wynne Godley

Abstract

This paper presents a simple growth model grounded in a stock-flow monetary accounting framework. The framework ensures that all stocks and all flows are accounted for and that the real and financial sides of the economy are coherent with one another. Credit, money, equities and stocks of real capital link periods of time with one another in articulated sequences. Wealth is allocated between assets on Tobinesque principles but no equilibrium condition is necessary to bring the "demand" for money into equivalence with its "supply". Growth and profit rates, as well as valuation, debt and capacity utilization ratios are analysed using simulations in which a growing economy is assumed to be shocked by changes in interest rates, liquidity preference, real wages, and the parameters which determine how firms finance investment. acceleration in recent years that might explain the growth in earnings inequality. There has also been no dramatic change in the number of workers who are undereducated. These results reinforce the conclusions of earlier work that reports of a growing skills mismatch are likely overdrawn.

Suggested Citation

  • Marc Lavoie & Wynne Godley, 2000. "Kaleckian Models of Growth in a Stock-Flow Monetary Framework: A Neo-Kaldorian Model," Economics Working Paper Archive wp_302, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_302
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    Cited by:

    1. Özlem Onaran & Engelbert Stockhammer & Lukas Grafl, 2009. "The finance-dominated growth regime, distribution, and aggregate demand in the US," Department of Economics Working Papers wuwp126, Vienna University of Economics and Business, Department of Economics.
    2. Eugenio Caverzasi & Antoine Godin, 2013. "Stock-flow Consistent Modeling through the Ages," Economics Working Paper Archive wp_745, Levy Economics Institute.
    3. Marc Lavoie, 2001. "Endogenous Money in a Coherent Stock-Flow Framework," Economics Working Paper Archive wp_325, Levy Economics Institute.
    4. Passarella, Marco, 2012. "A simplified stock-flow consistent dynamic model of the systemic financial fragility in the ‘New Capitalism’," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 570-582.
    5. Eckhard Hein, 2010. "Shareholder Value Orientation, Distribution And Growth-Short- And Medium-Run Effects In A Kaleckian Model," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 302-332, May.
    6. Jamee K. Moudud, 2000. "Harrod versus Thirlwall: A Reassessment of Export-Led Growth," Economics Working Paper Archive wp_316, Levy Economics Institute.
    7. Peter Skott, 2010. "Growth, Instability and Cycles: Harrodian and Kaleckian Models of Accumulation and Income Distribution," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 5 Edward Elgar Publishing.
    8. Peter Skott, 2012. "Theoretical And Empirical Shortcomings Of The Kaleckian Investment Function," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 109-138, February.
    9. Hein, Eckhard, 2010. "The rate of interest as a macroeconomic distribution parameter: Horizontalism and Post-Keynesian models of distribution of growth," MPRA Paper 23372, University Library of Munich, Germany.
    10. Amit Bhaduri, 2011. "A contribution to the theory of financial fragility and crisis," Cambridge Journal of Economics, Oxford University Press, vol. 35(6), pages 995-1014.
    11. Alex Izurieta, 2001. "Can Countries under A Common Currency Conduct Their Own Fiscal Policies?," Macroeconomics 0108008, EconWPA.
    12. Ryoo, Soon, 2010. "Long waves and short cycles in a model of endogenous financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 163-186, June.
    13. Eckhard Hein & Till van Treeck, 2007. "'Financialisation' in Kaleckian/Post-Kaleckian models of distribution and growth," IMK Working Paper 07-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    14. Alessandro Caiani & Antoine Godin & Stefano Lucarelli, 2012. "Schumpeter in a matrix: a Stock Flow Consistent analysis of technological change," Quaderni di Dipartimento 175, University of Pavia, Department of Economics and Quantitative Methods.
    15. Jakob Kapeller & Bernhard Schütz, 2014. "Debt, boom, bust: a theory of Minsky-Veblen cycles," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(4), pages 781-814.
    16. Eckhard Hein, 2006. "Interest, Debt and Capital Accumulation—A Kaleckian Approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 337-352.
    17. Marco, Passarella, 2011. "Systemic financial fragility and the monetary circuit: a stock-flow consistent approach," MPRA Paper 28498, University Library of Munich, Germany.
    18. Passarella, Marco, 2011. "The two-price model revisited. A Minskian-Kaleckian reading of the process of 'financialization'," MPRA Paper 32033, University Library of Munich, Germany.
    19. Amit Bhaduri, 2010. "A Contribution to the Theory of Financial Fragility and Crisis," Economics Working Paper Archive wp_593, Levy Economics Institute.
    20. Yann Guy, 2010. "Industrial Major Firms Investments in a Financialized Context," Working Papers hal-00402021, HAL.
    21. Man-Seop Park, 2004. "Credit money and Kaldor's 'institutional' theory of income distribution," Review of Political Economy, Taylor & Francis Journals, vol. 16(1), pages 79-99.

    More about this item

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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