Conflict in the profit-led growth model

Romar Correa

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2015, vol. 9, No 2015-6, 9 pages

Abstract: We model the interaction between capitalists and entrepreneurs as a dynamic game. The open-loop Nash equilibrium and the closed-loop Nash equilibrium are distinguished. The purpose is to answer some questions that have arisen in the development of profit-led versus wage-led growth models. We find that the rate of profit and the discount rate as well as the responsiveness of the wage rate or aggregate consumption to the accumulation of capital are critical to explaining the change in regimes.

Keywords: capital accumulation; rentier consumption (search for similar items in EconPapers)
JEL-codes: B51 C73 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifweej:20156

DOI: 10.5018/economics-ejournal.ja.2015-6

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