Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model

Eckhard Hein

PSL Quarterly Review, 2012, vol. 65, issue 260, 11-51

Abstract: In a Kaleckian distribution and growth model with workers' debt we examine the short and long run effects of three stylized facts of "finance-dominated capitalism": a fall in animal spirits of the firm sector with respect to real investment in capital stock, re-distribution of income at the expense of the wage share, and increasing lending of rentiers to workers for consumption purposes. In particular, we specify the conditions for long-run stability of the workers' debt-capital ratio. We thus identify the threshold for this ratio to turn unstable causing increasing financial fragility and finally financial crisis due to systemic stock-flow or stock-stock dynamics.

Keywords: Finance-dominated capitalism; distribution; household debt; financial fragility; growth; Kaleckian model (search for similar items in EconPapers)
JEL-codes: E12 E21 E22 E25 O41 (search for similar items in EconPapers)
Date: 2012
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Related works:
Working Paper: Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model (2011)
Working Paper: Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model (2011)
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