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Title:Interest rate, debt, distribution and capital accumulation in a post-Kaleckian model PDF Logo
Authors:Hein, Eckhard
Issue Date:2004
Series/Report no.:WSI-Diskussionspapiere 133
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.
Subjects:Interest rate
debt
distribution
capital accumulation
JEL:E44
E25
E12
E22
O42
Document Type:Working Paper
Appears in Collections:WSI-Diskussionspapiere, Wirtschafts- und Sozialwissenschaftliches Institut, Hans-Böckler-Stiftung

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