Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model

Authors

  • Eckhard Hein

DOI:

https://doi.org/10.13133/2037-3643/9937

Keywords:

Finance-dominated capitalism, distribution, household debt, financial fragility, growth, Kaleckian model

Abstract

In a Kaleckian distribution and growth model with workers’ debt we examine the short and long run effects of three stylized facts of “finance-dominated capitalism”: a fall in animal spirits of the firm sector with respect to real investment in capital stock, re-distribution of income at the expense of the wage share, and increasing lending of rentiers to workers for consumption purposes. In particular, we specify the conditions for long-run stability of the workers’ debt-capital ratio. We thus identify the threshold for this ratio to turn unstable causing increasing financial fragility and finally financial crisis due to systemic stock-flow or stock-stock dynamics.

 

 

 

JEL Codes: E12, E21, E22, E25, O41

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How to Cite

Hein, E. (2012). Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model. PSL Quarterly Review, 65(260). https://doi.org/10.13133/2037-3643/9937

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