Explaining persistent cycles in a short-run context: firms’ propensity to invest and omnipotent shareholders

Sebastien Charles

MPRA Paper from University Library of Munich, Germany

Abstract: In this article, we develop a standard short-run Kaleckian macromodel. First, we study the stability of equilibrium and make some comparative static exercises. Then, we take into account different specifications for an endogenous propensity to invest and systematically analyze the short-run dynamics of the model. We show that when firms’ managers adopt abnormal behaviours due to pressures from shareholders regarding the propensity to invest the system exhibits persistent cycles and chaotic trajectories. The analysis emphasizes that, even in the short-run, shareholders may generate instability which represents a serious threat that should not be underestimated for a capitalist economy.

Keywords: Kaleckian model; propensity to invest; fluctuations (search for similar items in EconPapers)
JEL-codes: B59 E12 E32 (search for similar items in EconPapers)
Date: 2009, Revised 2009
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Journal Article: Explaining persistent cycles in a short-run context: firms' propensity to invest and omnipotent shareholders (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18520

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