RECONSIDERING THE INVESTMENT–PROFIT NEXUS IN FINANCE‐LED ECONOMIES: AN ARDL‐BASED APPROACH

Till van Treeck

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Economic Theory and Policy Monetary Policy and Economic Impact Housing, Finance, and Neoliberalism

Abstract

ABSTRACT A Post‐Keynesian growth model is developed, in which financial variables are explicitly taken into account. Variants of an investment function are estimated econometrically, applying the ARDL (auto‐regressive distributed lag)‐based approach proposed by Pesaran et al. (Journal of Applied Econometrics, 16 (3), pp. 289–326). The econometric results are discussed with respect to a remarkable phenomenon that can be observed for some important OECD countries since the early 1980s: accumulation has generally been declining while profit shares and rates have shown a tendency to rise. We concentrate on one potential explanation of this phenomenon, which is particularly relevant for the USA and relies on a high propensity to consume out of capital income.

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References

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