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Interest rate debt distribution and capital accumulation in a post-Kaleckian model

[working paper]

Hein, Eckhard

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Corporate Editor Wirtschafts- und Sozialwissenschaftliches Institut in der Hans-Böckler-Stiftung
Abstract "The introduction of monetary variables into post-Keynesian models of distribution and growth is an ongoing process. Lavoie (1995) has proposed a Kaleckian ‘Minsky-Steindl-model’ of distribution and growth, incorporating the effects debt and debt services have on short and long run capital accumulation. This attempt, however, can be extended because neither has the rate of capacity utilisation been endogenously determined, nor have the potential effects of interest rate variations on distribution between wages and gross profits explicitly been incorporated in the model. In the present paper we therefore augment Lavoie’s ‘Minsky-Steindl-model’, building our analysis on a Kaleckian distribution and growth model which has already taken into account distribution effects of interest rate variations on the short run equilibrium. Into this model the effects of debt and debt services are explicitly introduced, the effects of interest rate variations on the short and the long run equilibrium are derived, and the results are compared to those of Lavoie’s ‘Minsky-Steindl-model’. 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 savings and investment functions but also on initial conditions with respect to the interest rate and the debt-capital-ratio." [author's abstract]
Keywords interest rate; investment; distribution theory; growth; theory
Classification Political Economy; Basic Research, General Concepts and History of Economics
Method documentation
Free Keywords Minsky-Steindl-Modell
Document language English
Publication Year 2004
City Düsseldorf
Page/Pages 38 p.
Series WSI-Diskussionspapier, 133
Licence Deposit Licence - No Redistribution, No Modifications
data provider This metadata entry was indexed by the Special Subject Collection Social Sciences, USB Cologne