Search

Over several decades, income has become increasingly concentrated at the top of the distributional pyramid in many rich countries. Raising taxes on top income earners and top wealth owners has gained traction in many policy circles as a way to reverse this inequality surge. This paper examines the views of mainstream economists, Thomas Piketty and Post-Keynesian economists concerning the impact of taxation and optimal tax policy. We show that, in terms of taxing the rich, these three perspectives have a great deal in common, but there are also many disagreements. We argue that Piketty occupies a middle ground between mainstream and Post-Keynesian economics, and there is a good deal that Piketty and these two schools can learn from one another. [ABSTRACT FROM AUTHOR]

Rent seeking has once again become an important topic in economics. However, rent seeking poses challenges that standard economic theory is not well equipped to handle. This paper develops a working definition of rent seeking that can be applied to post-Keynesian growth models. The main finding is that, in a post-Keynesian framework, rent seeking will have an effect on income distribution and average productivity. In addition, increases in rent seeking can have undesirable effects on the distribution of talent. [ABSTRACT FROM AUTHOR]

The paper investigates the effects of changes in the distribution of income and wealth on aggregate demand and its components. The model of Bhaduri and Marglin is extended to include personal income inequality as well as asset prices and debt. This allows for an evaluation of the wage- or profit-led nature of demand regimes, of the expenditure cascade argument and several hypotheses regarding the effects of wealth and debt. Our estimates are based on a panel of 18 OECD countries covering the period 1980-2013. For the full panel, the average demand regime is found to be wage led. We fail to find effects of personal inequality, but do find strong effects of debt and property prices, which have been the main drivers of aggregate demand in the decade prior to the 2007 crisis. [ABSTRACT FROM AUTHOR]

The paper discusses the hypothesis that the functional distribution of income is not necessary stable along the growth path of a capitalist economy. We reviewed Pasinetti and Foley models showing that if we use the traditional definition of capital, i.e., capital as the value of productive resources (i) r > g is a necessary condition for the existence of balanced growth, and it will not lead to an explosive process of income concentration and (ii) r > i is a necessary condition for a financially robust growth path. Thus we conclude that from a post-Keynesian perspective, Piketty's argument that the root of the increase of inequality in capitalism is that the capital return rate is higher than the growth rate of the economy is wrong. [ABSTRACT FROM AUTHOR]

This article investigates the macroeconomic effects of firms’ debts and income distribution on economic growth and inflation under three different post-Keynesian interest rate rules (the Kansas City rule, the Smithin rule, and the Pasinetti rule) by setting up a dynamic post-Keynesian model. After reviewing debates on the post-Keynesian interest rate policies, this article evaluates the relative merits of the three rules in their relationship with economic growth regimes and inflation dynamics. Accordingly, this article explicitly shows that (i) a policy rule works effectively under some economic growth and inflation patterns but not necessarily under other patterns, (ii) a policy rule contributing to high economic growth may not always be compatible with stabilisation of economic growth, and (iii) the macroeconomic effects of debt and income distribution on economic growth and inflation are closely related to the choice of interest rate rule. [ABSTRACT FROM PUBLISHER]

In a seminal paper on Marxian business cycle theory, Goodwin (1967) presented a model which assumed that a higher wage share leads to lower investment and thus a general economic slowdown. In contrast Kalecki (1971) was arguing that a higher wage share would have an expansionary effect because the consumption propensity out of wage income is higher than that out of profit income. Based on a general model that allows for wage-led as well as profit-led demand regimes, this paper estimates the effects of a change in the wage share on aggregate private domestic demand with quarterly data for 12 OECD countries.JEL classification: E11, E12, E20, E22, E25 [ABSTRACT FROM PUBLISHER]