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

Chapter 7 in Varieties of Capitalism, 2023, pp 136-162 from Edward Elgar Publishing

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 exportled 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: Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2023
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