Financialization and its Long-run Macroeconomic Effects in a Kalecki-Minsky Model
Shinya Fujita and
Hiroaki Sasaki ()
Discussion papers from Graduate School of Economics Project Center, Kyoto University
One of the main characteristics of “financialization” is the redistribution of income in favor of shareholders, at the expense of workers. In this paper, we interpret pro-shareholder redistribution as a decrease in both retention ratio and wage share. Using both the Kaleckian macroeconomic model and the Minskyan taxonomy of finance regime, we investigate the long-run effects of such parametric changes on the rate of capital accumulation and the debt-capital ratio, on the one hand, and on the financial structures of firms, on the other. A decrease in the retention ratio leads to higher capital accumulation, but makes financial structures fragile. Moreover, a rise in profit share improves the financial position in the long run if the short-run equilibrium is profit-led growth regime; this is not necessarily so with wage-led growth.
Pages: 28 pages
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Persistent link: https://EconPapers.repec.org/RePEc:kue:dpaper:e-11-001
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