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A neo-kaleckian model is proposed to analyze the bidirectional relationship between growth and income distribution. To do this, the price equation of Kalecki (1971) is modified and the model of Bhaduri and Marglin (1990) is extended. If the growth is wage-led, then the income path is shown to be cyclical. In contrast, if it is profit-driven, it is sustained. In this last scenario, income is concentrated in profits because the profit rate is higher than the growth rate. Finally, it is argued that if the state redistributes income in a greater amount than the market concentrates it, wage-led growth can be sustained. [ABSTRACT FROM AUTHOR]

Since the early 1980s, financialization has become an increasingly important trend in developed capitalist countries, with different timing, speed, and intensities in different countries. Rising inequality has been a major feature of this trend. Shares of wages in national income have declined and personal income inequality has increased. Against this background unsustainable demand and growth regimes have developed that dominated the major economies before the crisis: the 'debt-led private demand boom' and the 'export-led mercantilist' regime. The article applies this post-Keynesian approach to the macroeconomics of finance-dominated capitalism of three Baltic Sea countries, Denmark, Estonia, and Latvia, both for the pre-crisis and the post-crisis period. First, the macroeconomics of finance-dominated capitalism are briefly reiterated. Second, the financialization-distribution nexus is examined for the three countries. Third, macroeconomic demand and growth regimes are analyzed, both before and after the crisis. [ABSTRACT FROM AUTHOR]

Drawing on Harrod, Kalecki and Kaldor, this paper seeks to revive the view that ceteris paribus firms reduce investment if they have already built up high capacities relative to their assessment of the normal potential of their markets. This reaction introduces a fundamental stabilizing mechanism into the economy. The paper adapts the idea to a growth context and applies it to the neo‐Kaleckian baseline model with its Harrodian instability. It demonstrates that, in principle, a sufficiently strong feedback could stabilize the steady state. [ABSTRACT FROM AUTHOR]

This short note argues that the canonical neo‐Kaleckian growth model does not yield a balanced growth path due to the absence of an inbuilt mechanism by which desired and actual rates of capital accumulation are equalized. Introducing non‐generating capacity autonomous demand does not solve such inconsistency. Contrary to what Lavoie () claims, we show that the latter is also unable to bring capacity utilization to its normal level. In light of recent contributions (e.g., Nikiforos,), we suggest that making normal capacity utilization an endogenous variable is an alternative better suited to deal with the issue. [ABSTRACT FROM AUTHOR]

As well‐known, the canonical Neo‐Kaleckian growth model fails to reconcile actual and normal rates of utilization in equilibrium. Some recent contributions revive an old proposal for solving this problem—making the normal rate of utilization an endogenous variable that converges to the actual utilization rate—justifying it with new, micro‐founded premises. We argue that these new justifications for the convergence of normal to actual utilization do not stand closer scrutiny. First, the proposed microeconomic model relies on various restrictive assumptions, some of which are mutually inconsistent. Second, the derivation of the macroeconomic adjustment mechanism from the microeconomic analysis involves a logical leap that can be justified only by a very arbitrary assumption with little economic justification. Finally, we discuss the way in which this mechanism has been incorporated into the Neo‐Kaleckian growth model by proposers of this approach. We show that, even if one puts aside, for the sake of argument, the first two points, the existence of autonomous components of demand is sufficient to invalidate the resulting macroeconomic model. [ABSTRACT FROM AUTHOR]

This rejoinder is a rebuttal of the claims made by Dávila‐Fernández, Oreiro, and Punzo (in press) in their comment on Lavoie (). All three points that they make are mistaken: I did not pretend that the introduction of autonomous noncapacity expenditures would on its own allow the neo‐Kaleckian growth model to converge toward the normal rate of capacity utilization; the 'Keynesian' message is not eliminated when investment expenditures are essentially induced in a neo‐Kaleckian model; and the equations that they provide to endogenize the normal rate of capacity utilization are meaningless. [ABSTRACT FROM AUTHOR]

This article presents the Kaleckian model of growth and distribution that sets a budget deficit ratio as an indicator of fiscal policy and examines the short- and long-run effects of an increase in budget deficits and a rise in income tax rates on the economy. The key short-run outcomes are as follows. First, expanded budget deficits have a positive effect on the rate of capacity utilization. Second, the tax rate for wage income does not affect the rate of capacity utilization, whereas the tax rate for capital income has a favorable impact on it. This result implies that raising the tax rate for capital income can be an important policy instrument for stimulating the economy. Third, we find that the economy exhibits a wage-led aggregate demand in the short run. The main long-run results are as follows. First, the effect of expanded budget deficits on the growth rate is ambiguous, since a higher debt burden negatively influences the rate of capacity utilization and hence economic growth, despite the increase in demand caused by government borrowing. A higher budget deficit ratio thus raises the growth rate only if a certain condition is satisfied. Second, the tax rate for capital income has a positive impact on the growth rate. Third, the economy shows a wage-led growth in the long run. [ABSTRACT FROM AUTHOR]

Building on a two-country Kaleckian model of a currency union, we examine the consequences of balance-of-payments adjustment policies, focusing on the interdependence between the long-run growth paths of member countries. The model separates the short-run from the long-run dynamic, comparing price and wage dynamics in each country in the light of Thirlwall's balance-of-payments-constrained growth model. We show that by shifting the burden of adjustment to the less competitive country, austerity and wage moderation policies lead to long-term recessionary effects. Only expansionary policies in the more competitive country can achieve the two goals of reducing external imbalances and increasing the long-run growth rate in both member countries. [ABSTRACT FROM AUTHOR]

Kaleckian models, which study the relation between functional income distribution and demand formation, have focused on how macro-level distribution affects macro-level performance. In real economies, however, labour–management negotiations are held at the industry level and thus the relation between sectoral distribution and sectoral/macroeconomic performance should be considered. This study presents a two-sector Kaleckian model with intermediate inputs and investigates how a distributive change in one sector affects sectoral/macroeconomic capacity utilization and capital accumulation. The results of the presented comparative static analysis and traverse analysis demonstrate that one sector's change in the mark-up rate shifts each sector's rate of capacity utilization in the opposite direction, while the impact of one sector's change in the mark-up rate on performance differs by sector. The analyses also demonstrate that the effect of a change in the mark-up rate on capital accumulation depends on the firm's animal spirits. [ABSTRACT FROM AUTHOR]

A generic Kalecki-Robinson model of growth is developed that, subject to different closures, illustrates the different channels through which the economy can adjust to a change in demand conditions in the long run. The closures are shown to have different implications for the behaviour of the rate of capacity utilization and hence whether and how the economy achieves a 'fully-adjusted position' (equalization of the actual and normal rates of capacity utilization). Assuming that the normal rate of capacity utilization is exogenously fixed, it is then shown that variation in the actual capacity utilization rate can nevertheless occur—at least within limits—without triggering 'Harrodian instability'. This result emanates from a discontinuity in the investment function that is grounded in Harrod's own macrodynamics, so that it is ultimately the combination of Harrodian and Kaleckian dynamics that gives rise to long-run variations in the actual rate of capacity utilization in the presence of a fixed normal rate. Aggregate and industry-level US capacity utilization data are then used to calculate possible bands within which the rate of capacity utilization may vary without triggering Harrodian instability. A key finding is that the conditions necessary for the latter appear to be relatively rare. [ABSTRACT FROM AUTHOR]

This paper analyzes the effects of the regional distribution of the banking system on investment rates in Brazil. The investigation relies on a perspective whereby the role of external funds in inducing firms’ investment is determined by the disparate regional distribution of the banking system. Empirical results from a panel-data multilevel model indicate that the regional concentration and centralization of the banking system are relevant for firms’ investment choices. More importantly, the fitness of the multilevel model indicates the need to consider that investment rates vary according to a regional hierarchical banking structure (centre versus periphery). [ABSTRACT FROM AUTHOR]

Power is a pervasive phenomenon in the economy and society, associated with inequality of income, wealth, race, gender, information etc. However, power has been and still is the bête noire in much of modern economics, with only a few exceptions. In non-mainstream economics, in the classical, the Marxian, the Kaleckian and the Post-Keynesian currents of thought, power is an important analytical category. Yet in the main parts of contemporary mainstream economics, especially in much of conventional micro- and macroeconomics, no attempt is made to come to grips with what power means and what its effects are, and the systemic importance of power relationships is widely ignored. Against this backdrop, this paper attempts to bring to the fore ideas of past economists and social and political philosophers, who basically saw socio-economic affairs and outcomes as driven by, and reflecting, power relationships, starting with the writings of late mercantilist and early classical economists. It also analyses how the attention in economics shifted away from the problem of power from the latter part of the nineteenth century with the rise to dominance of marginalist economics. [ABSTRACT FROM AUTHOR]

Abstract: The paper introduces monetary policy into the canonical Kaleckian growth model with a built‐in Harrodian instability. It abstains, however, from the simple and immediately stabilizing interest rate inverse IS curve. Instead, more indirect effects are examined, which realistically will take time to work out. In particular, (a) the trend rate of growth governing the investment decisions additionally responds to the difference between the profit rate and the real rate of interest; and (b) the real interest rate may enter dynamic adjustments of the price markup. The main finding is that the Harrodian forces could still be overcome and stability of the steady state position is re‐established provided that the profitability motive in (a) and the responsiveness in the Taylor policy rule are both sufficiently strong. By contrast, the indirect feedback effects produced by (b) broaden the scope for instability. In sum, monetary policy in this extended framework can favour stability but is not necessarily the stabilizing panacea that the New Consensus considers it to be. [ABSTRACT FROM AUTHOR]

Abstract: Agent‐based models are inherently microstructures—with their attention to agent behavior in a field context—and only aggregate up to systems with recognizable macroeconomic characteristics. One might ask why the traditional Keynes–Kalecki or structuralist (KKS) model would bear any relationship to the multi‐agent modeling approach. This paper shows how KKS models might benefit from agent‐based microfoundations, without sacrificing traditional macroeconomic themes, such as aggregate demand, animal spirits and endogenous money. Above all, the integration of the two approaches gives rise to the possibility that a KKS system—stable over many consecutive time periods—might lurch into an uncontrollable downturn, from which a recovery would require outside intervention. As a by‐product of the integration of these two popular approaches, there emerges a cogent analysis of the network structure necessary to bind real and financial agents into an integrated whole. It is seen, contrary to much of the existing literature, that a highly connected financial system does not necessarily lead to more crashes of the integrated system. [ABSTRACT FROM AUTHOR]

Abstract: This paper aims to provide a modeling framework that keeps track of the interdependency between firms’ external financing structure and the state of the economy. Accordingly, it is based on the well‐known Kaleckian model which is combined with a modeling strategy of a sentiment index that was proposed by Franke (2012, 2014). The sentiment influences firms’ subjective sales expectations and thus their planned level of investment. As it turns out, the non‐linear model set‐up appears to be flexible in the sense that it is able to generate different interesting dynamic scenarios. It is shown that it may produce (a) sentiment‐driven business cycle fluctuations, including endogenously determined Minsky‐Koo‐kind recessions, and, more interestingly, (b) two distinct economic environments that exist contemporaneously: a ‘low‐’ and ‘high‐indebted’ regime. [ABSTRACT FROM AUTHOR]

This paper presents a simple post-Kaleckian model of distribution and growth that incorporates personal income inequality and interdependent social norms. The model shows in an easily accessible manner that macroeconomic effects of changes in personal and functional income distribution can potentially reinforce or dampen each other. The resulting variety of demand and growth regimes is due to different distributional effects on consumption demand. Therefore, the second part of the paper investigates the empirical relevance of the additional demand regimes by estimating aggregate consumption functions with variables for personal and functional income distribution for the United States and Germany. We find similar effects of functional income distribution for both countries. However, for the US, we find positive long-run effects of personal income inequality on consumption. The effect is strongest for the top 10% income share and the Gini index and less strong for the top 5% and 1% income shares. While this is evidence for relative consumption patterns, it also supports the view that the "super rich" are a relatively distant class for most people - questioning the notion of expenditure cascades from the very top to the very bottom. In contrast, for Germany we fail to find compelling evidence for effects of personal income distribution. [ABSTRACT FROM AUTHOR]

This article is linked to some recent attempts at including a noncapacity creating autonomous expenditure category as the driver and determinant of growth into Kaleckian distribution and growth models. Whereas previous contributions have focussed on taming Harrodian instability, generated by the deviation of the goods market equilibrium rate of capacity utilization from a normal or target rate, we rather focus on the so-far neglected issues of deficit, debt, and distribution dynamics in such models. For this purpose, we treat the growth of government expenditures on goods and services, financed by credit creation, as the exogenous growth rate driving the system. We examine the long-run convergence of the system toward such a growth rate, analyze the related debt dynamics, and deal with stability and income distribution issues. Finally, we touch upon the economic and, in particular, fiscal policy implications of our model results. [ABSTRACT FROM AUTHOR]

Nicholas Kaldor was a progressive force in economics who made several major contributions, which are well covered by other contributors to this issue in his memory. Yet, like most first generation Keynesians, he stayed within the paradigm of The Concluding Notes to the General Theory, in which Keynes claimed that provided the State intervened to manage the level of demand, the supply side of an economy could be left to the processes of perfect or imperfect competition, whereas Kalecki realised that oligopoly could influence both macroeconomic aggregates and policies. Like Keynes, he also assumed, with Ricardo, that trade was between different firms in different countries rather than recognising that capital already was multinational and that this could qualify both exchange rate changes such as that of the sterling in 1967 and his regional employment premium and selective employment tax. [ABSTRACT FROM AUTHOR]

The article uses a post Kaleckian model to analyze how currency devaluations affect aggregate demand and capital accumulation in an economy with foreign currency liabilities in the short-run. In benchmark post Kaleckian open economy models, currency devaluations have two effects. First, they change international price competitiveness and thus affect net exports. Second, devaluations change income distribution and thereby affect consumption and investment demand. The overall effect on aggregate demand and investment is ambiguous and depends on parameter values. Existing models, however, disregard balance sheet effects that arise from foreign currency-denominated external debt. The article develops a novel post Kaleckian open economy model that introduces foreign currency-denominated external debt and balance sheet effects to examine the demand-effects of devaluations. Furthermore, the article models the dynamics of external and domestic corporate debt. It discusses how an economy may end up in a vicious cycle of foreign-currency indebtedness and derives the conditions under which indebtedness becomes stable or unstable. It shows that the existence of foreign currency-denominated debt means that contractionary devaluations are more likely, and that foreign interest rate hikes, and high illiquidity and risk premia compromise debt sustainability. Devaluations only stabilize debt ratios if they succeed in boosting domestic capital accumulation. [ABSTRACT FROM AUTHOR]

In this article we analyze the effects of financialization on income distribution, before and after the Great Financial Crisis and the Great Recession, for the two liberal Anglo-Saxon economies, the United States and the United Kingdom, and for a typical Nordic welfare state economy, Sweden. We apply a Kaleckian perspective in which the focus will be on functional income distribution and thus on the relationship between financialization and the wage share or the gross profit share. According to this approach, financialization may affect aggregate wage or gross profit shares of the economy as a whole through three channels: first, the sectoral composition of the economy; second, the financial overhead costs and profit claims of the rentiers; and third, the bargaining power of workers and trade unions. We examine empirical indicators for each of these channels, both before and after the crisis. We find that the types of countries investigated here have shown broad similarities regarding redistribution before the crisis, however, with major differences in the underlying determinants. These differences have carried through to the period after the crisis and have led to different results regarding the development of distribution since then. [ABSTRACT FROM AUTHOR]

In the past twenty years, there has been considerable debate on the "coherence" of post Keynesian economics, in view of post Keynesian economists' ambitions to develop a paradigmatic alternative to neoclassical economics. Given the growing importance of methodological aspects in this discussion, this article addresses the differences of approach to economic theory between the fathers of the two most important strands in post Keynesian economics. We thus focus on Keynes's criticism of Kalecki's theory of the business cycle and the tensions between Keynes's logical approach and Kaleki's formal modeling. We show that in criticizing Kalecki's theory, Keynes made use of the same methodological criticism (based on detecting logical fallacies in reasoning) he had employed to attack both the classical theory and contemporary "pseudomathematical" models. After illustrating these fundamental differences between Keynes and Kalecki about the proper way of doing economics, we draw some conclusions on the possible future evolution of post Keynesian economics. [ABSTRACT FROM AUTHOR]

This study combines a neo-Kaleckian growth and distribution model with a sort of Sraffian supermultiplier mechanism in which autonomous demand is driven by foreign exports. Short-, medium- and long-run equilibria are considered. In the long-run case, the expectations of sales growth governing investment change adaptively, and this, combined with the autonomous growth rate of exports, produces convergence of the actual rate of capacity utilization to its normal rate. It is demonstrated that some aspects of the main Kaleckian results can be preserved not only in the short or medium run but also in the long run, in the sense that both (1) a decrease in the propensity to save, and (2) a change in income distribution favoring labor, bring about higher average rates of production growth and capital accumulation. However, the impact of a change in the profit share is shown to be subjected to the condition that the responsiveness of the real exchange rate with respect to the profit share has to be bounded from above, confirming that the scope for wage-led demand or wage-led growth can be limited by open-economy considerations, even within the supermultiplier context. [ABSTRACT FROM AUTHOR]

The aim of this paper is to review the Kaleckian and post-Kaleckian literature on income distribution and economic growth and question the extent to which they analyse countries' economic regimes and economic performances properly and appropriately to understand countries' economic performances. The debate focuses on the inclusion of profit margin in the investment function as a way to characterize the effective demand regime in the neoliberal era as a profit-led growth regime. Our argument is that this inclusion is not able to evaluate properly the countries' economic growth in terms of the consistency between its effective demand regimes and income distribution. Key words: Effective demand regime, Income distribution, Economic [ABSTRACT FROM AUTHOR]

ABSTRACT Lavoie () introduces autonomous demand in a defense of the (post-) Kaleckian analysis against classical and Harrodian criticisms. This note corrects some errors in Lavoie's analysis, questions the stabilizing potential of autonomous demand, and points out some differences between the two variants of Lavoie's 'neo-Kaleckian' model. [ABSTRACT FROM AUTHOR]

ABSTRACT I respond to Skott' (2016) main comments on Lavoie (2016), which are: first, when calibrating with plausible parameter values, the stabilizing mechanism is unlikely to operate; second, in the analysis of the simple model, I have omitted the second stationary solution; third, he implies that the constraints that need to be imposed on my simple and complex models are in contradiction with each other. I argue that Skott confutes prototypes and reality; that the second stationary solution is of little interest; and that the constraints that need to be imposed on the simple and complex variants of the model are not in contradiction with each other. [ABSTRACT FROM AUTHOR]

The Weisskopfian approach has dominated empirical studies of the US rate of profit for the last thirty-five years. Forty-five years earlier, Michal Kalecki developed a different frame suitable for empirical profit rate studies, which had the potential to give different, but complementary, insight into the profit rate analysis based on the Weisskopfian approach. This paper first presents a development of the Kaleckian frame. It then applies this frame to the US economy and presents some preliminary empirical results. [ABSTRACT FROM AUTHOR]

A large body of neo-Kaleckian literature has debated the distributional determinants of demand and growth. One general conclusion has been that open economy considerations weaken the potential for a wage-led growth regime. However, this literature has largely ignored asset portfolio considerations and the stock and flow interactions that result from the feedback from savings to wealth and from wealth to the current account. This study develops a theoretical framework that specifies a fuller system of (instantaneous) flow equilibria embedded in a medium-run framework with stable steady-state stocks of real and financial assets. The balance-of-payments constraint that results ensures that simply raising the wage does not yield a higher stock of real capital. A lower markup may increase the steady-state stock of capital but only through the relative price channel. These results are much stronger than those derived in the existing literature, and more important, emergeregardlessof whether the demand regime is wage-led or profit-led in the absence of international trade. [ABSTRACT FROM PUBLISHER]

In this paper, we build a generalized two-sector Kaleckian growth model and explore the dynamics towards long-run positions. The model incorporates conflicting claims of labour and firms over income distribution and endogenous labour-saving technical progress. Adopting a stock-flow consistent framework, our simulation experiments yield the following results. First, the ‘paradox of thrift’ and the ‘paradox of costs’ hold, meaning that lower saving rates generate higher growth rates while higher real wages generate higher profit rates, but the magnitude of the impact depends on the initial status of income distribution and monetary policy. Second, changes in autonomous labour-saving innovations might explain the phenomenon of the ‘New Economy’ of the second half of the 1990s within an alternative framework. Our simulations with a two-sector model retrieve the analytical results achieved with a one-sector Kaleckian model, with the addition of path dependence. [ABSTRACT FROM AUTHOR]

Within the framework of the Kaleckian baseline model where firms finance investment by equities and debt, this note is concerned with a recent proposal by E. Hein to replace the common concept of a given retention rate with a given dividend rate. Considering in more detail the implications of his additional assumption of constant stock prices, it is revealed that the retained earnings of the firms will then be non-positive in a long-run financial equilibrium. It is furthermore shown that another and empirically more plausible assumption on the firms' equity issuance policy overcomes this deficiency and can also imply numerically acceptable retention rates. [ABSTRACT FROM AUTHOR]

This paper examines the emergence of hyperinflation in a small open economy with a fixed exchange rate from a post Keynesian perspective. Three variables play key roles: distributive conflict, external debt, and expectations about the exchange rate. First, we propose a short-run Kaleckian macro model. Then, we study the long-run behavior of the model by endogenizing the price level and foreign indebtedness. We conclude that the existence of expectations about the nominal exchange rate is crucial to explaining the emergence of hyperinflation. [ABSTRACT FROM AUTHOR]

This is a short note on the limits of Varieties of Capitalism and the potential of the Keynes-Kalecki approach proposed by Baccaro and Pontusson for overcoming them. It identifies the main problem as a failure to define capitalism itself. This effectively reduces the approach to a comparison of the U.S. and German economies at the end of the 20th century. It is in particular unable to recognize let alone explain the very different U.S. economic system in the immediate postwar decades or how the more recent emphasis on the market emerged to take its place. The promise of the Keynes-Kalecki approach is that it will overcome these limits, but the promise has not yet been realized. [ABSTRACT FROM AUTHOR]

This article analyzes the concept of the Keynesian multiplier from a new perspective. Several recent studies have shown that the fiscal multiplier is endogenous to the level of economic activity, increasing during recessions and decreasing during the boom. Here, we provide some evidence, explaining this variability over the business cycle, based on the overreaction of aggregate imports. Then, we apply the concept of endogenous propensity to import, varying with capacity utilization, to a neo- Kaleckian model of growth and distribution. We perform some simple simulations showing that the Keynesian multiplier increases during a recession, which logically does not advocate a reduction in public spending when the economy is in crisis. [ABSTRACT FROM AUTHOR]

This study investigates how profit sharing influences the economy by using a Kaleckian model. Unlike existing research, I endogenise the profit share. The analysis shows that profit sharing decreases or increases the equilibrium capacity utilisation rate depending on whether the productivity-enhancing effect of profit sharing is weak or strong. Moreover, the presented numerical simulations show that the profit-sharing effects on income distributions differ according to the relative strength of the productivity-enhancing effect of profit sharing. [ABSTRACT FROM AUTHOR]

This paper examines the 'utilisation controversy' around the Kaleckian model of growth and distribution. We show that the Federal Reserve data on capacity utilisation, which have been used by both sides of this debate, are the wrong kind of data for the issue under examination. Instead, a more appropriate measurement can be derived from the data on the average workweek of capital. We argue that the long-run dynamic adjustment, proposed by Kaleckian scholars, lacks a coherent economic rationale. We provide an alternative path towards the endogeneity of the desired utilisation at the micro and macro levels. Finally, we examine the proposed adjustment mechanism econometrically. Our results verify the endogeneity of the normal utilisation rate. [ABSTRACT FROM AUTHOR]

Neo-Kaleckian models of growth and distribution have been highly popular among heterodox economists. Two drawbacks of these models have, however, been underlined in the literature: first, the models do not usually converge to their normal rate of capacity utilization; second, the models do not include the Harrodian principle of dynamic instability. Some Sraffian economists have long been arguing that the presence of non-capacity creating autonomous expenditures provides a mechanism that brings back the model to normal rates of capacity utilization, while safeguarding the main Keynesian message and without going back to classical conclusions. The present article provides a very simple proof of this, showing within a neo-Kaleckian model that the Harrodian principle of dynamic instability gets tamed by the presence of autonomous consumer expenditures. [ABSTRACT FROM AUTHOR]

Over seventy years ago, Michal Kalecki noted that budget deficits would “permit profits to increase above the level determined by private investment and capitalists’ consumption.” Kalecki’s insight into the generation of “free cash” (cash in excess of new investment) was formulated at a time when consumer deficit spending and other private deficit spending was minuscule. But it can be shown that his insight can be extended not just to an expansion of public deficits but to private deficits as well. Over the past forty years, the rise of “free cash” and expanded deficits have allowed corporations to cut back on investment growth, funneling the excess cash into mergers, stock buybacks, and expanded dividends to the wealthy. In recent years, this outpouring of cash has accounted for well over fifty percent of corporate fixed investment. I run a simple “what if” exercise on U.S. corporate tax flows utilizing past U.S. tax rates to calculate the possible absorption of free cash and reduction of federal debt that would have been associated with such an exercise. [ABSTRACT FROM AUTHOR]

Aggregate demand is influenced by the functional distribution of income of an economy and that of its trading partner. The relationship between income distribution and output is analysed in a short-run, two-country neo-Kaleckian model. The effects of devaluation and redistribution are discussed in detail. Trade and redistribution within one country interact and output increases or decreases with changes in either depending on the specific distributional and exchange rate movements. The Marshall-Lerner condition is shown to be equivalent to the assumption of expansionary devaluation. If devaluation increases output, national redistribution policy towards wage earners is also more likely to be expansionary. [ABSTRACT FROM AUTHOR]

This article presents a basic Kaleckian model, enriched by the simultaneous addition of an Harrodian investment function and an autonomous expenditure component that grows at an exogenous rate. The model shows that the usual short-run properties (wage-led growth) are only transient, since the long-run growth rate converges towards that of autonomous expenditures. However, the impact on the level of variables (output, capital stock, labour, etc.) is permanent. The model also provides a conditional solution to the 'second' Harrod knife-edge problem: the destabilising behaviour of firms (as they adjust their investment decisions to the discrepancy between the actual and the normal rates of capacity utilisation) is now required to achieve the normal rate of capacity utilisation. [ABSTRACT FROM AUTHOR]

In this article a major channel through which financialisation or finance-dominated capitalism affects macroeconomic performance is examined: the distribution channel. Empirical data for the following dimensions of (re-)distribution in the period of finance-dominated capitalism since the early 1980s is provided for 15 advanced capitalist economies: functional distribution, personal/household distribution and the share and the composition of top incomes. Based on the Kaleckian approach to the determination of income shares, the effects of financialisation on functional income distribution are studied in more detail. Some stylised facts of financialisation are integrated into the Kaleckian approach, and by means of reviewing empirical and econometric literature it is found that financialisation and neoliberalism have contributed to the falling labour income share since the early 1980s through three main Kaleckian channels: 1) a shift in the sectoral composition of the economy, 2) an increase in management salaries and rising profit claims of the rentiers and thus in overheads, and 3) weakened trade union bargaining power. [ABSTRACT FROM AUTHOR]

Non-orthodox economists generally share the Keynesian Hypothesis of the independence of investment from capacity savings, in the long run no less than in the short run. This hypothesis marks an essential point of difference from neoclassical theory. Keynes showed that within the limits of the existing capacity utilisation, investment determines savings rather than the other way around. How best to extend this conclusion to the long run is the object of the current paper. The paper assesses the controversy on demand-led growth that has taken place since the mid-1980s between neo-Kaleckian and Sraffian authors. The Sraffian front may be divided into a first and a second Sraffian position, the latter being the Sraffian supermultiplier approach. I shall argue that this second approach is the most promising framework for analysing economic growth. [ABSTRACT FROM PUBLISHER]

This paper is concerned with two coupled Kaldor-Kalecki models of business cycles with delays in both the gross product and the capital stock. We consider two types of investment functions that lead to different behavior of the system. We introduce the model with unidirectional coupling to investigate the influence of a global economy (like the European Union) on a local economy (like Poland). We present detailed results of numerical analysis. [ABSTRACT FROM AUTHOR]

This paper presents a three-class growth model with labour market conflict. The classes are workers, a middle-management middle class and a ‘top’ management capitalist class. The model introduces personal income distribution that supplements conventional concerns with functional income distribution. Endogenously generated changes in personal income distribution can generate endogenous shifts from profit-led to wage-led regimes and vice versa. A three-class economy generates richer patterns of class conflict because the middle class has shared interests and conflicts with both capitalists and workers. Changes that benefit the middle class do not necessarily increase growth or employment or benefit workers. [ABSTRACT FROM PUBLISHER]

In this work we construct a Kaleckian model for analyzing the impacts of remittances upon economies of receiving countries. The arrival of remittances has two harmful effects: contraction of income, and the so-called Dutch Disease (DD). We use our model to formulate an economic policy with two objective variables and two instrumental variables, to solve or attenuate these problems. [ABSTRACT FROM AUTHOR]

We present a simple three-class model in the Kaleckian tradition to investigate the implications of a dominant managerial class for the dynamics of demand and distribution. Managers play a peculiar role in the economy, both because of their supervisory function - which results in surplus extraction and wage inequality - and because of their saving behavior. The adjustment of capacity utilization to accommodate goods market disequilibrium produces two distinct regimes with respect to the responsiveness of investment demand to profitability: a low investment-response regime, where effective demand appears to be both wage-led and inequality-led; and a high investment-response regime, where demand looks profit-led. In accordance with recent empirical evidence for the US, we introduce distributional dynamics that hinge on inequality squeezing workers' wage growth. We find that the low investment-responsiveness regime produces a stable demand-distribution equilibrium only if the wage squeeze effect is relatively small. On the other hand, the equilibrium in the high investment-response regime is saddle-path stable. The main distributional implication of the wage squeeze and inequality is that the effect of redistribution toward workers in both the low investment response regime and the high investment response regime leads to declining inequality and capacity utilization. Hence, in both regimes, the inequality-led features of the equilibrium dominate the wage-led or profit-led nature of effective demand. These findings imply that distributive dynamics lead to a stronger basis for cohesion in the interests of managers and capitalists compared to workers and managers. [ABSTRACT FROM AUTHOR]

We investigate the interaction between demand-driven growth and income distribution in open economies, by combining expenditure-switching and demand spillover effects in a neo- Kaleckian two country model. First, we specify elasticities of wage share and real exchange rate to the money wage relative to labor productivity, in order to precisely describe the distributive pass-through from money wages to the labor share and the real exchange rate. Second, we analyze the demand effects of an increase in the money wage for given labor productivity (a redistribution towards labor) in both H ome and F oreign country, as well as globally. We derive closed form results for two identical countries. These results indicate that redistribution towards labor at Home: (i) always increases growth globally if Home is wage-led, but can lead to lower growth at Home relative to Foreign; and (ii) will always imply lower growth at Home relative to Foreign if Home is profit-led, but can still be growth-enhancing at Home. Thus, to the extent that countries are concerned with their relative economic performance, a fallacy of composition can emerge. Numerical simulations suggest that these fallacies could indeed occur. As a consequence, 'returns to coordination' over international labor policies might be substantial. [ABSTRACT FROM AUTHOR]

Given one parameter restriction, an output-stabilization rule for the provision of public services turns a Kaldor- Kalecki- Steindl growth model with unstable, catastrophe-prone dynamics into one with a stable limit cycle. In contrast, using a budget-balancing rule produces a saddle point, along with closed orbits near the boundaries of the state space. Adding Kaleckian mark-up dynamics destabilizes the equilibrium, with a spiraling path followed by a spin-out found in simulation. A final exercise establishes the possibility of adding a variable workforce and a public unemployment insurance system. Throughout, an identity governs the dynamics of the stocks of public financial liabilities. [ABSTRACT FROM AUTHOR]

The economic impact of natural disasters has been neglected in the mainstream theories of development and economic growth. Only recently has a body of research into the economic effects of natural disasters begun to emerge. This recent research has taken into account the socio-economic impact of disasters, and has explored the influence of the pre-disaster socio-economic structure on the response to a disaster event when it occurs. However, a great deal of research fails to effectively examine this relationship within a general macroeconomic framework. In the absence of such attempts, this article aims to explore the dynamic effects of climatic disasters on key economic variables in the State of Queensland for the period of 2002 to 2011. The paper draws on the principles of a Kaleckian-Post- Keynesian multi-sectoral open economy theory, using powerful time series analysis and estimation techniques. Assuming natural disasters to be exogenous random shocks, this paper explores whether macroeconomic variables in the model differ significantly in their response to extreme climatic shocks. [ABSTRACT FROM AUTHOR]

Despite the present world context, originating in the financial implosion in the United States of America, we believe that the time has come to, at least partly, invert Joan Robinson's dictum. We propose instead mildly, 'where finance leads, enterprise follows'. Critiquing the neoclassical orthodoxy, we propose the Kalecki- Kaldorian synthesis, a Post-Keyensian alternative, in the tradition of sectoral distinction between agriculture and industry, production and foreign exchange bottlenecks with an added emphasis on the public sector in development strategy to address present day policy concerns for financial stability, growth and income distribution. [ABSTRACT FROM AUTHOR]

This paper uses modern gross national product accounting conventions to chart the various expenditures responsible for profit realisation from 1964 to 2009 in the USA. Revealed are significant changes in the main drivers of profit realisation after 1982. Specifically, the shifting distribution of income away from median workers and the use of debt are increasingly responsible for profit realisation after 1982. This represents a significant aspect of the economy that set the environment for the recent crisis and has implications for a post-crisis economy as well. [ABSTRACT FROM PUBLISHER]