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Interest Rates, Income Shares, and Investment in a Kaleckian Model

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  • Hein, Eckhard

Abstract

Neither the older post-Keynesian models of growth and distribution (Kaldor, J. Robinson) nor the models based on the work by Kalecki and Steindl take sufficiently account of monetary va¬riables. Starting from a non-monetary Kaleckian effective demand model by Bhaduri & Marglin in which investment is determined by costs and capacity utilisation and in which equilibrium capacity utilisation may be below normal, this paper deals with the effects of an exogenous variation in the monetary interest rate on the real equilibrium position of the economic system. Different regimes of accumulation are derived and it is shown that a negative relation between the interest rate and the rates of capa¬city utilisation, accumulation and profit usually expected in post-Keynesian theory only exists under special conditions.

Suggested Citation

  • Hein, Eckhard, 1999. "Interest Rates, Income Shares, and Investment in a Kaleckian Model," MPRA Paper 18607, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:18607
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    References listed on IDEAS

    as
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    3. Lavoie, Marc, 1996. "Horizontalism, Structuralism, Liquidity Preference and the Principle of Increasing Risk," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(3), pages 275-300, August.
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    5. John F. Henry & L. Randall Wray, 1998. "Economic Time," Macroeconomics 9811004, EconWPA.
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    10. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
    11. Franke, Reiner, 1988. "Integrating the Financing of Production and a Rate of Interest into Production Price Models," Cambridge Journal of Economics, Oxford University Press, vol. 12(2), pages 257-272, June.
    12. L. R. Wray, 1990. "Money and Credit in Capitalist Economies," Books, Edward Elgar Publishing, number 474.
    13. Arestis, Philip, 1996. "Post-Keynesian Economics: Towards Coherence," Cambridge Journal of Economics, Oxford University Press, vol. 20(1), pages 111-135, January.
    14. Dutt, Amitava Krishna, 1987. "Alternative Closures Again: A Comment on 'Growth, Distribution and Inflation.'," Cambridge Journal of Economics, Oxford University Press, vol. 11(1), pages 75-82, March.
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    Citations

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    Cited by:

    1. Schulten, Thorsten, 2002. "Europeanisation of collective bargaining: An overview on trade union initiatives for a transnational coordination of collective bargaining policy," WSI Working Papers 101, The Institute of Economic and Social Research (WSI), Hans-Böckler-Foundation.
    2. Eckhard Hein & Thorsten Schulten & Achim Truger, 2004. "Wage trends and deflation risks in Germany and Europe," Macroeconomics 0412008, EconWPA.
    3. Eckhard Hein, 2002. "Monetary policy and wage bargaining in the EMU: restrictive ECB policies, high unemployment, nominal wage restraint and inflation above the target," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 55(222), pages 299-337.
    4. Eckhard Hein, 2006. "Money, interest and capital accumulationin Karl Marx's economics: a monetary interpretation and some similaritiesto post-Keynesian approaches," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 13(1), pages 113-140.
    5. 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.
    6. Hein, Eckhard, 1999. "Zentralbank-Politik und makroökonomische Ergebnisse: eine sozio-institutionelle Interpretation
      [Central Bank Policies and Macroeconomic Results: A Socio-institutional Interpretation]
      ," MPRA Paper 18881, University Library of Munich, Germany.
    7. Mariolis, Theodore, 2007. "Distribution and Growth in an Economy with Heterogeneous Capital and Excess Capacity," MPRA Paper 24042, University Library of Munich, Germany.
    8. 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.
    9. Eckhard Hein, 2007. "Interest Rate, Debt, Distribution And Capital Accumulation In A Post-Kaleckian Model," Metroeconomica, Wiley Blackwell, vol. 58(2), pages 310-339, May.
    10. Hein, Eckhard, 2004. "Money, credit and the interest rate in Marx's economic. On the similarities of Marx's monetary analysis to Post-Keynesian economics," MPRA Paper 18608, University Library of Munich, Germany.
    11. Eckhard Hein, 2005. "Money, Interest, and Capital Accumulation in Karl Marx’s," Method and Hist of Econ Thought 0501002, EconWPA.
    12. Hein, Eckhard, 2002. "Money, interest, and capital accumulation in Karl Marx's economics: A monetary interpretation," WSI Working Papers 102, The Institute of Economic and Social Research (WSI), Hans-Böckler-Foundation.
    13. Bieling, Hans-Jürgen & Schulten, Thorsten, 2001. "Competitive restructuring and industrial relations within the European Union: Corporatist involvement and beyond?," WSI Working Papers 99, The Institute of Economic and Social Research (WSI), Hans-Böckler-Foundation.

    More about this item

    Keywords

    Interest Rates; Income Shares; Investment; Kaleckian Model;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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