Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56986
Authors: 
Patriarca, Fabrizio
Sardoni, Claudio
Year of Publication: 
2011
Series/Report no.: 
Working paper, Levy Economics Institute 697
Abstract: 
This paper studies the effects of an (exogenous) increase of nominal wages on profits, output, and growth. Inspired by an article by Micha┬▒ Kalecki (1991), who concentrated on the effects on total profits, the paper develops a model that explicitly considers the dynamics of demand, prices, profits, and investment. The outcomes of the initial wage rise are found to be path dependent and crucially affected by the firms' initial response to an increase in demand and a decrease in profit margins. The present model, which relates to other Post Keynesian/Kaleckian contributions, can offer an alternative to the mainstream approach to analyzing the effects of wage increases.
Subjects: 
distributional changes
disequilibrium
investment
growth
JEL: 
E22
E25
E31
Document Type: 
Working Paper

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