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Growth, Cycles, and Distribution

: A Kaleckian Approach

Hiroaki Sasaki

216mmx154mmx13mm hard, 194 pages

ISBN: 9784876983940

pub. date: 03/14

  • Price : JPY 3,500
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How does a change in income distribution between wages and profits affect output, employment, and economic growth? Why does a capitalist economy experience economic growth accompanied with business cycles? Based on the Kaleckian model that is a kind of post Keynesian model, this book extends it and presents a new framework. The Kaleckian model emphasizes the relationship between income distribution and output/growth, and has an advantage in that it easily investigates the effect of a change in income distribution on output/growth. However, many critics assert that the Kaleckian model is a short-run model but not a long-run model. A disequilibrium macrodynamic model presented in this book overcomes the criticism and can consistently explain the short run, medium, run and long run. The framework of this book simultaneously explains economic growth and cyclical fluctuations that are essentials in capitalist economies. The basic model of this book shows great originality in that it incorporates certain elements from Goodwin (the dynamics of the employment rate and income distribution), Kalecki (an investment function independent of savings and mark-up pricing in oligopolistic goods markets), and Marx (the reserve army and reserve army creation effects). Moreover, this book covers a broad range of topics such as regular and non-regular employment, a minimum wage policy, and international competition as well as topics of wage-led and profit-led that are frequently investigated by Kaleckian researchers.



1 Preliminaries
1.1 The Kaleckian model
1.1.1 Short-run model
1.1.2 Medium-run model
1.1.3 Long-run model
1.2 Short-run model
1.2.1 Adjustment of capacity utilization: Version 1
1.2.2 Determination of income distribution: Version 2

Part 1: Medium-run Kaleckian Models

2 Endogenous Technological Change, Income Distribution, and Unemployment with Inter-Class Conflict
2.1 Introduction
2.2 Basic framework of the model
2.2.1 Adjustment in the capital accumulation rate
2.2.2 Adjustment in the profit share
2.2.3 Adjustment in the growth rate of labor productivity
2.3 Existence and stability of the long-run equilibrium
2.3.1 Existence of the long-run equilibrium
2.3.2 Local stability of the long-run equilibrium
2.4 Numerical examples
2.5 Comparative statics analysis
2.6 Concluding remarks
Appendix 2.A: Determination of the equilibrium capacity utilization rate
Appendix 2.B: Determination of the equilibrium growth rate of labor productivity

3 Cyclical Growth in a Goodwin-Kalecki-Marx Model
3.1 Introduction
3.2 Basic framework of the model
3.3 Long-run equilibrium analysis
3.3.1 Existence of the long-run equilibrium
3.3.2 Local stability of the long-run equilibrium
3.3.3 Existence of closed orbits
3.3.4 Comparative statics analysis
3.4 Numerical simulations
3.4.1 Case 1 (wage-led growth): β < γ, Γ < 0
3.4.2 Case 2 (profit-led growth): β > γ, Γ < 0
3.5 Concluding remarks
Appendix 3.A: Effects of a rise in parameters on the long-run equilibrium values

Part 2: Long-run Kaleckian Models

4 Conflict, Growth, Distribution, and Employment: A Long-run Kaleckian Model
4.1 Introduction
4.2 Medium-run analysis
4.2.1 Framework of the model
4.2.2 Dynamics of the capacity utilization rate, the profit share, and the employment rate
4.2.3 Medium-run equilibrium
4.2.4 Comparative statics in the medium-run equilibrium
4.3 Long-run analysis
4.3.1 Dynamics of the normal capacity utilization rate and the expected rate of growth
4.3.2 Long-run equilibrium
4.3.3 Comparative statics in the long-run equilibrium
4.3.4 Numerical examples
4.4 Conclusion
Appendix 4.A: Endogenizing the target profit shares of workers and firms
Appendix 4.B: Derivation of the medium-run equilibrium profit share
Appendix 4.C: Local stability of the medium-run equilibrium
Appendix 4.D: Medium-run comparative statics analysis
4.4.1 A rise in A
4.4.2 A rise in s
4.4.3 A rise in n
Appendix 4.E: Derivation of equation (4.22)
Appendix 4.F: Convergence and path-dependency in the five-dimensional system with relatively small initial values (Case 1)
Appendix 4.G: Convergence and path-dependency in the five-dimensional system with relatively large initial values (Case 2)

5 Is the Long-run Equilibrium Wage-led or Profit-led? A Kaleckian Approach
5.1 Introduction
5.2 Medium-run equilibrium
5.2.1 Medium-run with Kalecki-type investment function
5.2.2 Medium-run analysis with MB-type investment function
5.2.3 Medium-run comparative statics analysis
5.3 Long-run equilibrium
5.3.1 Kalecki-type investment function
5.3.2 MB-type investment function
5.3.3 Summary
5.4 Conclusions
Appendix 5.A: Medium-run equilibrium profit share: Kalecki-type investment function
Appendix 5.B: Medium-run equilibrium profit share: MB-type investment function
Appendix 5.C: Local stability of the medium-run equilibrium: Kalecki-type investment function
Appendix 5.D: Local stability of the medium-run equilibrium: MB-type investment function
Appendix 5.E: Numerical examples in the long run: MB-type investment function

Part 3: Extended Short-run Kaleckian Models

6 The Macroeconomic Effects of the Wage Gap between Regular and Non-Regular Employment and of Minimum Wages
6.1 Introduction
6.2 The model
6.3 Characteristics of the steady state equilibrium and its stability
6.3.1 Characteristics of the steady state equilibrium
6.3.2 The stability of the steady state equilibrium
6.4 Introduction of minimum wages
6.4.1 The case of a profit-led demand regime
6.4.2 The case of a wage-led demand regime
6.5 Concluding remarks
Appendix 6.A: Introducing induced technical change
10 list of figures

7 International Competition and Distributive Class Conflict in an Open Economy Kaleckian Model
7.1 Introduction
7.2 Model
7.2.1 Dynamics of capacity utilization
7.2.2 Dynamics of the profit share
7.2.3 Dynamics of the real exchange rate
7.3 Dynamics of the model
7.4 Comparative static analysis
7.4.1 Saving rate of capitalists
7.4.2 Bargaining powers of firms and workers
7.4.3 Target value of the real exchange rate
7.4.4 Summary
7.5 Conclusions
Appendix 7.A: Stability analysis and proofs of propositions
Appendix 7.B: Numerical simulations
Appendix 7.C: Closed economy model