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A Kaleckian approach to the financialization-distribution-inflation nexus: Germany and Austria in comparative perspective

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  • Dabrowski, Cara

Abstract

In this paper, I extend the Hein and Stockhammer model of distribution and inflation by incorporating structural trends of financialization through three Kaleckian channels: (1) sectoral recomposition, (2) financial overhead costs and rentiers' profit claims, and (3) the bargaining power of trade unions and workers. The model is calibrated to two scenarios that reflect the institutionalized fear experienced by workers under neoliberal income policies. Following a theoretical exploration of potential inflationary shocks, an empirical case study comparing Germany and Austria is conducted. The analysis validates the relevance of all three Kaleckian channels, though their individual strength varies. The findings indicate that while rising import prices triggered the initial inflationary shock, firms subsequently increased unit profits by keeping overall domestic prices high even though import prices decreased. An inflation decomposition suggests a more pronounced class conflict in Austria, potentially attributable to less severe labor market deregulation.

Suggested Citation

  • Dabrowski, Cara, 2025. "A Kaleckian approach to the financialization-distribution-inflation nexus: Germany and Austria in comparative perspective," IPE Working Papers 250/2025, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  • Handle: RePEc:zbw:ipewps:312566
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    References listed on IDEAS

    as
    1. Thomas Dallery, 2009. "Post-Keynesian Theories of the Firm under Financialization," Review of Radical Political Economics, Union for Radical Political Economics, vol. 41(4), pages 492-515, December.
    2. Ümit Akcay & Eckhard Hein & Benjamin Jungmann, 2022. "Financialisation and Macroeconomic Regimes in Emerging Capitalist Countries Before and After the Great Recession," International Journal of Political Economy, Taylor & Francis Journals, vol. 51(2), pages 77-100, April.
    3. Petra Duenhaupt, 2012. "Financialization and the rentier income share -- evidence from the USA and Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(4), pages 465-487, June.
    4. Thomas Ferguson & Servaas Storm, 2023. "Myth and Reality in the Great Inflation Debate: Supply Shocks and Wealth Effects in a Multipolar World Economy," Working Papers Series inetwp196, Institute for New Economic Thinking.
    5. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-188, Winter.
    6. Thomas Ferguson & Servaas Storm, 2023. "Myth and Reality in the Great Inflation Debate: Supply Shocks and Wealth Effects in a Multipolar World Economy," International Journal of Political Economy, Taylor & Francis Journals, vol. 52(1), pages 1-44, January.
    7. Engelbert Stockhammer, 2017. "Determinants of the Wage Share: A Panel Analysis of Advanced and Developing Economies," British Journal of Industrial Relations, London School of Economics, vol. 55(1), pages 3-33, March.
    8. Setterfield, Mark, 2007. "The rise, decline and rise of incomes policies in the US during the post-war era: an institutional-analytical explanation of inflation and the functional distribution of income," Journal of Institutional Economics, Cambridge University Press, vol. 3(2), pages 127-146, August.
    9. Eckhard Hein, 2023. "Macroeconomics after Kalecki and Keynes," Books, Edward Elgar Publishing, number 21764.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Inflation; conflict inflation; distribution; Kaleckian theory of distribution; financedominated capitalism; financialization; financial and economic crisis;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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