Interest rate, debt, distribution and capital accumulation in a post-Kaleckian model

No 133, WSI Working Papers from The Institute of Economic and Social Research (WSI), Hans Böckler Foundation

Abstract: The introduction of monetary variables into post-Keynesian models of distribution and growth is an ongoing process. Lavoie (1995) has proposed a Kaleckian ?Minsky-Steindl-model? of distribution and growth, incorporating the effects debt and debt services have on short and long run capital accumulation. This attempt, however, can be extended because neither has the rate of capacity utilisation been endogenously determined, nor have the potential effects of interest rate variations on distribution between wages and gross profits explicitly been incorporated in the model. In the present paper we therefore augment Lavoie?s ?Minsky-Steindl-model?, building our analysis on a Kaleckian distribution and growth model which has already taken into account distribution effects of interest rate variations on the short run equilibrium. Into this model the effects of debt and debt services are explicitly introduced, the effects of interest rate variations on the short and the long run equilibrium are derived, and the results are compared to those of Lavoie?s ?Minsky-Steindl-model?. It is shown, that the effects of interest variations on the endogenously determined equilibrium values of the model do not only depend on the parameter values in the savings and investment functions but also on initial conditions with respect to the interest rate and the debt-capital-ratio.

Keywords: Interest rate; debt; distribution; capital accumulation (search for similar items in EconPapers)
JEL-codes: E12 E22 E25 E44 O42 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: INTEREST RATE, DEBT, DISTRIBUTION AND CAPITAL ACCUMULATION IN A POST‐KALECKIAN MODEL (2007)
Working Paper: Interest rate, debt, distribution and capital accumulation in a post-Kaleckian model (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wsidps:133

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