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Mark-up Pricing, Sectoral Dynamics, and the Traverse Process in a Two-Sector Kaleckian Economy

Shinya Fujita

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

Abstract: Kaleckian models, which study the relation between functional income distribution and demand formation, have focused on how macro-level distribution affects macro-level performance. In the real economy, however, labour–management negotiations are held at the industry level and thus the relation between sectoral distribution and sectoral/macroeconomic performance should be considered. This study presents a two-sector Kaleckian model with intermediate inputs and investigates how a distributive change in one sector affects sectoral/macroeconomic capacity utilization and capital accumulation. The results of the presented comparative static analysis and traverse analysis demonstrate that one sector’s change in the mark-up rate shifts each sector’s rate of capacity utilization in the opposite direction, while the impact of one sector’s change in the mark-up rate on performance differs by sector. The analyses also demonstrate that the effect of a change in the mark-up rate on capital accumulation depends on the firm’s animal spirits.

Keywords: Two-sector model; Mark-up pricing; Traverse analysis (search for similar items in EconPapers)
JEL-codes: E12 E22 O41 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-08
New Economics Papers: this item is included in nep-ger, nep-mac and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:kue:dpaper:e-15-005

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