The Cambridge Equation with government activity revisited

Abstract

This paper offers an analysis of the steady-state distributional features found in a Kaldor-Pasinetti process, in which the government sector is allowed to run persistent deficits that may be financed through different instruments. Productive capital and bonds generate single rates of return, while workers' saving propensity remains uniform. This paper seeks to establish a generalization of Cambridge Eauqtion, considering the specific contributions of Steedman (1972), Pasinetti (1989), Dalziel (1991), and Faria (2000).

Important contributions of the Cambridge Equation to the role of political economy: from Pasinetti to our days

“…The controversy of the fi nancial system by considering debts in the economy opened the discussion for controversies likely is presented by Commendatore (2002) when he claims that Palley mis-specifi es growth equilibrium condition, which corrected and answered by Palley (2002) and Park (2006). Araujo & Teixeira (2010) concludes that the Dalziel results can also be obtained if the capitalists hold money in equilibrium, on the other hand, they show that if the government monetises public defi cit, the analysis of the monetary policy will be neutral. The profi t rate will be determined without considering monetary variables.…”