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http://hdl.handle.net/10419/59309
  
Title:Interest rates, distribution and capital accumulation: A Post-Kaleckian perspective on the US and Germany PDF Logo
Authors:Hein, Eckhard
Schoder, Christian
Issue Date:2009
Series/Report no.:Working Paper, Institute for International Political Economy Berlin 04/2009
Abstract:We analyse the effects of interest rate variations on the rates of capacity utilisation, capital accumulation and profit in a simple post-Kaleckian distribution and growth model. This model gives rise to different potential accumulation regimes depending on the values of the parameters in the investment, saving and distribution function. Estimating these core behavioural equations for the US and Germany in the period 1960-2007, we find significant and robust effects of interest payments with the expected sign in each of the equations. Our estimation results imply, both for the US and for Germany, that the effects of changes in the real long-term rate of interest on the equilibrium rates of capacity utilisation, capital accumulation and profits are characterised by the 'normal regime': Rising long-term real rates of interest cause falling rates of capacity utilisation, capital accumulation and profits, as well as redistribution at the expense of labour income and hence an increasing profit share in both countries.
Subjects:Interest rate
distribution
demand
capital accumulation
Kaleckian model
JEL:E12
E21
E22
E25
Document Type:Working Paper
Appears in Collections:IPE Working Papers, Institute for International Political Economy, HWR Berlin

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