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Varieties and interdependencies of demand and growth regimes in finance-dominated capitalism

Franz Prante, Eckhard Hein and Alessandro Bramucci ()

No 173/2021, IPE Working Papers from Berlin School of Economics and Law, Institute for International Political Economy (IPE)

Abstract: We outline and simulate a stylised post-Keynesian two country stock-flow consistent model to demonstrate the interconnection of three of the main features/outcomes of finance-dominated capitalism, namely worsening income distribution for the bottom 90% households, the rise of international imbalances and the build-up of financial fragility. In the model, twobasic regimesemerge, depending on the institutional setting of the respective model economy:the debt-led private demand boom regime (DLPD) and the export-led mercantilist regime(ELM). We demonstrate the complementarity and interdependence of these two regimesand show how this constellation transformed after the crisis into the domestic demand-led regime (DDL) stabilised by government deficits, on the one hand, andELMregimes, on the other, depending ontherequired deleveraging of private household debt, distributional developments and fiscal policy.

Keywords: post-Keynesian macroeconomics; financialisation; growth regimes; institutions; inequality; debt; stock-flow consistent model (search for similar items in EconPapers)
JEL-codes: B59 E02 E11 E12 E25 E65 F41 O41 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-fdg, nep-hme, nep-mac and nep-pke
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