THE IMPORTANCE OF THE RETENTION RATIO IN A KALECKIAN MODEL WITH DEBT ACCUMULATION

Hiroaki Sasaki · Shinya Fujita

33 citations0/0 files storedMetroeconomica

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Economic Theory and Policy Political Economy and Marxism Economic theories and models

Abstract

ABSTRACT By using a Kaleckian model with debt accumulation, Hein (2007; Metroeconomica, 56 (2), pp. 310–39) found that the long‐run equilibrium value of the debt–capital ratio is positive and stable only if interest rates are extremely high and if the short‐run equilibrium exhibits the ‘debt‐led’ growth regime. However, this conclusion crucially depends on the assumption that the retention ratio of firms is equal to unity. By relaxing this assumption, we show that there exists a positive and stable long‐run equilibrium even under the ‘debt‐burdened’ regime without any constraint on the nominal interest rate.

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References

1990Unemployment and the real wage: the economic basis for contesting political ideologies 1990Horizontalists and Verticalists: The Macroeconomics of Credit Money 1989Horizontalists and Verticalists: The Macroeconomics of Credit Money 2004Reconstructing Macroeconomics 2004Reconstructing Macroeconomics: Structuralist Proposals and Critiques of the Mainstream 1991Profit Squeeze and Keynesian Theory 2002Distribution, Demand and Growth in Neo-Kaleckian Macro-Models 1995INTEREST RATES IN POST‐KEYNESIAN MODELS OF GROWTH AND DISTRIBUTION

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