Varieties and interdependencies of demand and growth regimes in finance-dominated capitalism: a Post-Keynesian two-country stock–flow consistent simulation approach

Franz Prante, Eckhard Hein and Alessandro Bramucci

Review of Keynesian Economics, 2022, vol. 10, issue 1, 264-290

Abstract: The authors outline and simulate a stylized Post-Keynesian two-country stock–flow consistent model to demonstrate the interconnection of three of the main features/outcomes of finance-dominated capitalism, namely worsening income distribution for the bottom 90 per cent of households, the rise of international imbalances, and the build-up of financial fragility. In the model, two basic regimes emerge, depending on the institutional setting of the respective model economy: the debt-led private demand boom regime and the export-led mercantilist regime. The authors demonstrate the complementarity and interdependence of these two regimes and show how this constellation transformed after a crisis into the domestic demand-led regime stabilized by government deficits, on the one hand, and export-led mercantilist regimes, on the other, depending on the required deleveraging of private household debt, distributional developments and fiscal policy.

Keywords: Post-Keynesian macroeconomics; financialization; growth regimes; institutions; inequality; debt; stock–flow consistent model (search for similar items in EconPapers)
JEL-codes: B59 E02 E11 E12 E25 E65 F41 O41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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