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Inequality and Growth in Neo-Kaleckian and Cambridge Growth Theory

Thomas Palley

No 167-2016, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper examines the relationship between inequality and growth in the neo-Kaleckian and Cambridge growth models. The paper explores the channels whereby functional and personal income distribution impact growth. The growth - inequality relationship can be negative or positive, depending on the economy's characteristics. Contrary to widespread claims, inequality per se does not impact growth through macroeconomic channels. Instead, both growth and inequality are impacted by changes in the underlying forms and pattern of income payments. However, inequality is critical at the microeconomic level as it explains differences in household propensities to consume which are at the foundation of neo-Kaleckian and Cambridge growth theory.

Keywords: Income Inequality; growth; neo-Kaleckian theory; Cambridge growth theory (search for similar items in EconPapers)
JEL-codes: E0 E12 E25 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2016
New Economics Papers: this item is included in nep-gro, nep-mac and nep-pke
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Journal Article: Inequality and growth in neo-Kaleckian and Cambridge growth theory (2017) Downloads
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