Income Distribution, Debt Accumulation, and Financial Fragility in a Kaleckian Model with Labor Supply Constraints

Hiroaki Sasaki and Shinya Fujita

Discussion papers from Graduate School of Economics Project Center, Kyoto University

Abstract: This paper investigates the effect of changes in the retention ratio, profit share, interest rate, and natural rate of growth on the rate of capital accumulation and the financial structure of firms by using a Kaleckian growth model with labor supply constraints. We show that if the economy exhibits a debt-burdened regime, depending on certain conditions, there could be cyclical fluctuations such that the financial structure of firms changes periodically from speculative finance to Ponzi finance.

Keywords: Financial structure; labor supply constraints; Kaleckian model; cyclical fluctuations (search for similar items in EconPapers)
JEL-codes: E12 E21 E22 E32 E44 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2012-09
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Persistent link: https://EconPapers.repec.org/RePEc:kue:dpaper:e-12-007

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