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Autonomous demand and the Marglin-Bhaduri model: a critical note

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  • Riccardo Pariboni

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Abstract

Within Post-Keynesian macroeconomic theory, the contribution by Marglin and Bhaduri (Marglin and Bhaduri, 1990; Bhaduri and Marglin, 1990) on the relationship between income distribution and growth has progressively asserted itself as a benchmark model, a reference point that has originated and still gives rise to plenty of theoretical and empirical works. Given this popularity, in the related literature it is often claimed that the only open question left is an empirical one - to assess econometrically whether a particular economy is wage or profit-led. In this essay, I will argue that some theoretical issues, related to this model and to the literature inspired by it, can nonetheless be raised. In particular, the treatment of investment appears to be the least convincing aspect of the approach a là Marglin-Bhaduri. More specifically, it seems possible to raise some doubts about an independent long-run influence of the profit rate or of the profit share on investment, influence that is not in general justified or explained in detail by this literature and that to some extent is simply taken for granted. It will be shown that, if the Marglin-Bhaduri model is integrated with an explicit consideration of the autonomous components of demand, income distribution does not exert any permanent influence on the rate of growth of the economy and on the rate of accumulation. Matching this result with the usual assumption, made in Post-Keynesian models of growth and distribution, that capacity utilization is the adjusting variable in equilibrating investment and savings leads to paradoxical results that question the plausibility of an accumulation function like the one used in the Marglin-Bhaduri model.

Suggested Citation

  • Riccardo Pariboni, 2015. "Autonomous demand and the Marglin-Bhaduri model: a critical note," Department of Economics University of Siena 715, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:715
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    References listed on IDEAS

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    Cited by:

    1. Marwil J. Dávila-Fernández & José L. Oreiro & Mario W. D. Dávila, 2018. "Endogenizing Non-Price Competitiveness In A Model With Capital Accumulation And Bopc On Growth," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 83, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Won Jun Nah & Marc Lavoie, 2017. "Long-run convergence in a neo-Kaleckian open-economy model with autonomous export growth," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 40(2), pages 223-238, April.
    3. Aguiar de Medeiros, Carlos & Trebat, Nicholas, 2016. "Latin America at a Crossroads: Controversies on Growth, Income Distribution and Structural Change," Centro Sraffa Working Papers CSWP22, Centro di Ricerche e Documentazione "Piero Sraffa".

    More about this item

    Keywords

    Income distribution; Investment function; Growth; Marglin-Bhaduri;

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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