Fiscal policy and social infrastructure provision under alternative growth and distribution regimes

Hiroshi Nishi and Kazuhiro Okuma
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Kazuhiro Okuma: Tokai University

Evolutionary and Institutional Economics Review, 2023, vol. 20, issue 2, No 3, 259-286

Abstract: Abstract We built a Kaleckian dynamic model that can comprehensively analyse the growth, distribution, and employment rate of the government's social infrastructure and debt accumulation. The model allows for not only wage-led growth and profit-led growth regimes but also labour-market-led and goods-market-led distribution regimes. Particular attention is paid to the demand effects of fiscal policy and the productivity growth effect of social infrastructure investment. Our model derives the following results. A combination of alternative growth and distribution regimes is important for stability. When government debt also changes in the long-run, the Domar condition is required for stability. Despite the principally Kaleckian nature, the long-run economic growth rate depends not on demand or fiscal parameters but on supply-side parameters. We conclude that the government can still play an important role in stabilising the economy, improving the quality of social infrastructure, and achieving a resilient economy.

Keywords: Fiscal policy; Social infrastructure; Kaleckian model; Growth regime; Distribution regime (search for similar items in EconPapers)
JEL-codes: E11 E12 E25 H54 O40 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s40844-023-00262-y

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