A two‐sector neo‐Kaleckian model of growth and distribution: Investment allocation and evolutionary dynamics
About: This article is published in Metroeconomica.The article was published on 2021-02-01. It has received 2 citations till now. The article focuses on the topics: Investment (macroeconomics).
Citations
More filters
TL;DR: In this article, the authors analyzed the paradox of thrift in a two-sector Kaleckian growth model with one consumption and one investment good, differential sectoral markups, and profit rates equalization, and showed that when the investment function depends on aggregate capacity utilization and on the aggregate profit share (the Bhaduri-Marglin investment function), it may fail if markups are higher in the investment good sector.
Abstract: We analyze the paradox of thrift in a two-sector Kaleckian growth model. We consider an economy with one consumption and one investment good, differential sectoral markups, and profit rates equalization. We show that when the investment function depends on aggregate capacity utilization and on the aggregate profit share (the Bhaduri-Marglin investment function) the paradox of thrift in its growth version may fail if mark-ups are higher in the investment good sector. In this case, an increase in the saving rate produces a reallocation of economic activity towards the investment good sector; the
aggregate profit share rises and its positive effect on investment may offset the reduction in average capacity utilization if investment is relatively more sensitive to profitability than to the level of activity.
3 citations
TL;DR: In this paper , a disaggregated version of the post-Kaleckian (Bhaduri, A. and S. Marglin 1990) approach to economic growth is developed, which is conditioned not only to patterns of evolving demand but also to the distributive features of the economy.
Abstract: Relying upon the Pasinettian notion of vertical integration (Pasinetti, L. 1981. Structural Change, and Economic Growth: A Theoretical Essay on the Dynamics of the Wealth of Nations. Cambridge: Cambridge University Press), we develop a disaggregated version of the post-Kaleckian (Bhaduri, A. and S. Marglin. 1990. 'Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies.' Cambridge Journal of Economics 14 (4): 375–393) approach to economic growth. With this analysis, the structural changes are conditioned not only to patterns of evolving demand but also to the distributive features of the economy. Considering oligopolist power and under-capacity utilization within the structural economic dynamic framework allows for heterogeneous final demand and mark-ups, with the profit margins of the consumption sector depending on the mark-up of the corresponding investment sector. Besides, in this set-up, it emerges the possibility vnthat each sector in the economy exhibits either a profit-led or a wage-led growth regime.
References
More filters
TL;DR: Game theory and computer simulation analyses show, however, that a “limited war” strategy benefits individual animals as well as the species.
Abstract: Conflicts between animals of the same species usually are of “limited war” type, not causing serious injury. This is often explained as due to group or species selection for behaviour benefiting the species rather than individuals. Game theory and computer simulation analyses show, however, that a “limited war” strategy benefits individual animals as well as the species.
5,524 citations
TL;DR: In this article, the authors proposed a method to solve the problem of об-�ор теоригруппам: классические (рикардианскi, марксистскinе, неоклαссiцируются по чeтырем г
Abstract: Дается обзор теорий, касающихся одной из ключевых проблем политической экономии, - проблемы распределения дохода. Имеющиеся теории классифицируются по четырем группам: классические (рикардианские), марксистские, неоклассические и кейнсианские.
1,706 citations
TL;DR: Using the Keynesian theory of effective demand, the authors demonstrates how particular models such as that of "cooperative capitalism" enunciated by the left Keynesian social democrats, the Marxian model of "profit squeeze" emphasizing distributive conflict, and even the conservative model relying on "supply side" stimulus fit in as particular variants of a more general theoretical scheme through a reconstruction of the familiar IS schedule.
Abstract: Using the Keynesian theory of effective demand, this paper demonstrates how particular models, such as that of "cooperative capitalism" enunciated by the left Keynesian social democrats, the Marxian model of "profit squeeze" emphasizing distributive conflict, and even the conservative model relying on "supply side" stimulus, fit in as particular variants of a more general theoretical scheme through a reconstruction of the familiar IS schedule. The argument is weaved around the theme of the relations between unemployment and real wage in the context of both a closed and an open economy to explain the common macroeconomic basis of contesting ideologies. Copyright 1990 by Oxford University Press.
1,118 citations
TL;DR: In this paper, the authors examined the inter-action between growth and income distribution in an underdeveloped economy with the help of a simple macroeconomic model and showed that a bad income distribution could explain stagnation in the sense of reduced growth.
Abstract: The deceleration in the rate of industrial growth in the Indian economy since the middlesixties, initially interpreted by some as a temporary downward deviation from trend, hasnow come to be generally accepted as reflecting long-run tendencies towards stagnation.Several explanations for these tendencies have been offered. Bhagwati and Desai (1970)and Bhagwati and Srinivasan (1975) have focused on inefficiencies and the misallocationof resources arising from industrial policies pursued by the government. Others,Chakravarty (1974), Raj (1976) and Vaidyanathan (1974) among them, have emphasisedthe sluggishness of agricultural growth which is alleged to have retarded industrial growthby limiting markets and the supply of wage goods and raw materials. A third view, reflectedin Srinivasan and Narayana (1977) for example, has put the blame on a slackening of invest-ment demand due to lower public investment, but does not explain why public investmentfell, or why its fall restrained industrial growth. Finally, there is the explanation, put forthin Bagchi (1970, 1975, 1982), in Nayyar (1978) and in parts of Mitra (1977), that inequali-ties in income distribution have resulted in a limited demand for industrial goods, reducedincentives for investment, and therefore reduced growth. This view seems to suggest apositive relation between growth and income equality which is opposed to the generallyaccepted idea, derived from Cambridge growth models, that higher growth requires greaterinequality.The purpose of this paper is to examine the last explanation by considering the inter-action between growth and income distribution in an underdeveloped economy with thehelp of a simple macroeconomic model. The model is a stylisation of the Indian economy,so that we will be able to use the model to assess the argument that a deceleration in therate of growth of the Indian industrial economy could have been caused by an unequaldistribution of income. The argument will not be made that this income distributional con-straint is the binding constraint on industrial growth: the model will merely examine theinternal consistency of the argument that a bad income distribution could explain stagnation(in the sense of reduced growth), and show that in the Indian context, as in other similarcontexts, this argument can be put forward in explaining 'stagnation'.Our argument is first presented with a highly simplified schematisation of the Indianeconomy, which we shall call the basic model. The economy modelled produces only one
523 citations
TL;DR: This paper summarizes recent approaches to noncooperative game theory that have been based on evolutionary models on how to expect equilibrium play in games.
Abstract: Introduced by John von Neumann and Oskar Morgenstern (1944), energized by the addition of John Nash’s (1950) equilibrium concept, and popularized by the strategic revolution of the 1980s, noncooperative game theory has become a standard tool in economics. In the process, attention has increasingly been focused on game theory’s conceptual foundations. Two questions have taken center stage: Should we expect Nash equilibrium play—that is, should we expect the choice of each player to be a best response to the choices of the other players? If so, which of the multiple Nash equilibria that arise in many games should we expect? In the 1980s, game theorists addressed these questions with models based on the assumptions that players are perfectly rational and have common knowledge of this rationality. In the 1990s, however, emphasis has shifted away from rationalitybased to evolutionary models. One reason for this shift was frustration with the limitations of rationality-based models. These models readily motivated one of the requirements of Nash equilibrium, that players choose best responses to their beliefs about others’ behavior, but less readily provided the second requirement, that these beliefs be correct. Simultaneously, rationality-based criteria for choosing among Nash equilibria produced alternative “equilibrium refinements”—strengthenings of the Nash equilibrium concept designed to exclude implausible Nash equilibria—with sufficient abandon as to prompt despair at the thought of ever choosing one as the “right” concept. A second reason for the shift away from rationality-based game theory was a change in the underlying view of what games represent. It was once typical to interpret a game as a literal description of an idealized interaction, in which an assumption of perfect rationality appeared quite
202 citations