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

  • Hein, Eckhard

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18607.

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Date of creation: 1999
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Handle: RePEc:pra:mprapa:18607
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  1. Thomas I. Palley, 1996. "Accommodationism versus Structuralism: Time for an Accommodation," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 18(4), pages 585-594, July.
  2. 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.
  3. John F. Henry & L. Randall Wray, 1998. "Economic Time," Economics Working Paper Archive wp_255, Levy Economics Institute.
  4. 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 257-72, June.
  5. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
  6. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-93, December.
  7. L. R. Wray, 1990. "Money and Credit in Capitalist Economies," Books, Edward Elgar, number 474.
  8. Taylor, Lance, 1985. "A Stagnationist Model of Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 9(4), pages 383-403, December.
  9. Wray, L Randall, 1992. "Alternative Theories of the Rate of Interest," Cambridge Journal of Economics, Oxford University Press, vol. 16(1), pages 69-89, March.
  10. Lavoie, M, 1995. "Horizontalism, Structuralism, Liquidity Preference and the Principle of Increasing Risk," Working Papers 9513e, University of Ottawa, Department of Economics.
  11. Arestis, Philip, 1996. "Post-Keynesian Economics: Towards Coherence," Cambridge Journal of Economics, Oxford University Press, vol. 20(1), pages 111-35, January.
  12. Kregel, J A, 1985. "Hamlet without the Prince: Cambridge Macroeconomics without Money," American Economic Review, American Economic Association, vol. 75(2), pages 133-39, May.
  13. Lavoie, M., 1993. "Interest Rates in Post-Keynesian Models of Growth and Distribution," Working Papers 9314e, University of Ottawa, Department of Economics.
  14. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
  15. Robert Pollin, 1991. "Two Theories of Money Supply Endogeneity: Some Empirical Evidence," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 13(3), pages 366-396, April.
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