Interest, Debt and Capital Accumulation—A Kaleckian Approach

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn the present paper we explicitly introduce interest payments and debt into a Kaleckian distribution and growth model with an investment function very close to Kalecki's original writings. The effects of interest rate variations on the short-run equilibrium values of capacity utilisation, capital accumulation and the rate of profit are derived, and the long run effects on the equilibrium debt-capital-ratio are also analysed. It is shown, that the effects of interest variations on the endogenously determined equilibrium values of the model do not only depend on the parameter values in the saving and investment functions but also on the interest elasticity of distribution and in some cases on initial conditions with respect to the interest rate and the debt-capital-ratio. If the conditions for short-run 'normal' effects of interest rate variations are given, the economy will be characterised by a long-run unstable debt-capitalratio and by the macroeconomic 'paradox of debt'. These results are similar to other models and hint to the robustness of Kaleckian 'monetary' models of distribution and growth with respect to the specification of the investment function.JEL-classification: E12, E22, E25, E44, O42

Finance-dominated capitalism and re-distribution of income: a Kaleckian perspective

“…Econometrically, however, it seems to be difficult to disentangle these effects and further studies on these issues seem to be required. Hein andSchoder (2011) andTomaskovic-Devey andLin (2011) are the only recent studies to our knowledge which supply statistically significant results for the overhead costs and gross profit targets channel through which financialization has affected income shares. All the econometric studies referred to so far, however, find significant effects of the last channel of influence of financialization on the profit share to be reviewed: bargaining power and activity of trade unions.…”

“…Recently, this idea has been further extended arguing that from the perspective of the management of the firm, dividend payments are as well a kind of overhead obligation. A permanent increase of dividend payments could therefore induce management to recover this drain of funds for real investment or other purposes by means of increasing the mark-up, either by raising prices or forcing down unit labor costs if market conditions and relative bargaining power of firms and labor unions allow for it (Hein 2010a(Hein , 2010bHein andvan Treeck 2010a, 2010b). …”

“…14 However, Kalecki (1954, p. 18) adds: "The degree of monopoly may, but need not necessarily, increase as a result of a rise in overheads relative to prime costs." growth (Lavoie 1993;Hein 2006Hein , 2007Hein , 2008. 15 A permanent increase in interest rates (or interest payments) would thus induce firms on average to increase the mark-up in order to survive.…”

Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model

“…See Graziani (1989Graziani ( , 1994, Lavoie (1992: 151-169), Seccareccia (1996Seccareccia ( , 2003 and Hein (2007: 70-79). 5 See for a similar procedure with respect to the introduction of monetary variables into PK models of distribution and growth Dutt (1989Dutt ( , 1992, Dutt/Amadeo (1993), Hein (2006aHein ( , 2006bHein ( , 2007, Lavoie (1992Lavoie ( : 347-371, 1993Lavoie ( , 1995, and Taylor (1985Taylor ( , 2004. 6 Repayment of debt is not considered explicitly.…”

‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review

“…(2000)] increases, the indifference curve representing firms' preferences becomes flatter and firms wish to move to the left along the expansion frontier. Other authors have emphasised the financial effects of shareholder value orientation, based on the idea that a higher rate of distributed profits reduces managers' ability to invest (Hein, 2006(Hein, , 2007Lavoie, 1995Lavoie, , 2008Ndikumana, 1999;van Treeck, 2007). Finally, some authors have considered both effects to be relevant (Dallery/van Treeck, 2008;Hein, 2008b,c;Skott/Ryoo, 2008a).…”