Corporate debt, endogenous dividend rate, instability and growth
Metroeconomica, 2022, vol. 73, issue 2, 514-549
In a neo‐Kaleckian growth‐model, we endogenize the dividend rate and corporate debt in the long run and investigate the possibility of multiple equilibria and instability in the economy. We find that the economy is in a wage‐led demand and debt‐burdened growth regime. However, both debt‐led and debt‐burdened demand regimes are possible. In some instances, the speed of the adjustment parameter related to the dividend dynamics plays a crucial role in stabilizing the economy. Otherwise, the economy may lose its stability and gives birth to limit cycles. A rise in the floor level of the targeted dividend–capital ratio has a destabilizing effect on the economy. The same is true for a rise in the interest rate. Moreover, a significant rise in the interest rate may cause instability in the economy. Therefore, a lower value of the floor level of the targeted dividend–capital ratio and a lower level of interest rate are desirable for promoting stability in the economy.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Working Paper: Corporate Debt, Endogenous Dividend Rate, Instability and Growth (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:metroe:v:73:y:2022:i:2:p:514-549
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0026-1386
Access Statistics for this article
Metroeconomica is currently edited by Heinz D. Kurz and Neri Salvadori
More articles in Metroeconomica from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().