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Title:Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model PDF Logo
Authors:Hein, Eckhard
Issue Date:2011
Series/Report no.:Working Paper, Institute for International Political Economy Berlin 11/2011
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.
Subjects:Finance-dominated capitalism
distribution
household debt
financial fragility
growth
Kaleckian model
JEL:E12
E21
E22
E25
O41
Document Type:Working Paper
Appears in Collections:IPE Working Papers, Institute for International Political Economy, HWR Berlin

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