Distribution and Growth: A Dynamic Kaleckian Approach

Fabrizio Patriarca () and Claudio Sardoni ()

Economics Working Paper Archive from Levy Economics Institute

Abstract: This paper studies the effects of an (exogenous) increase of nominal wages on profits, output, and growth. Inspired by an article by Michal 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.

Keywords: Distributional Changes; Disequilibrium; Investment; Growth (search for similar items in EconPapers)
JEL-codes: E22 E25 E31 (search for similar items in EconPapers)
Date: 2011-11
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Citations: View citations in EconPapers (1)

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