Macroeconomic implications of financialisation

Skøtt, Peter; Ryoo, Soon

doi:10.1093/cje/ben012

Cited by 168 publications

(113 citation statements)

References 18 publications

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“…10 The general structure of the model is similar to that in Skott (1981Skott ( , 1989 and Skott and Ryoo (2008), but the household sector is disaggregated into two social classes, 'capitalists' and 'workers'. Both capitalists and workers make wages, dividends on stocks and interest incomes on deposits, but wages of the capitalist households are modeled as an allocation of profits by corporations in the form of the compensation for top managers.…”

Section: A Cambridge Two-class Corporate Economymentioning

confidence: 99%

“…Following the approach in Skott (1981Skott ( , 1989 and Skott and Ryoo (2008), households' saving/portfolio behavior is specified in terms of their desired stock-flow ratios:…”

Section: The Model Needs To Address the Increasing Importance Of Manamentioning

confidence: 99%

“…The analysis is based on a Cambridge two-class model developed in Ryoo (2016b), which extends Kaldor (1955Kaldor ( /56, 1966 and Pasinetti (1962) along the lines of Skott (1981Skott ( , 1989 and Skott and Ryoo (2008). Some empirical components of this paper are motivated by recent findings of Piketty and Saez 1 (2003), Piketty (2014) and Saez and Zucman (2014) regarding income and wealth distribution in the U.S. 1 The paper starts to point out the di culties of Piketty's neo-classical version of explanation of US income inequality which is based on the combination of the rising aggregate wealthincome ratio and high elasticity of factor substitution (section 2).…”

Section: Introductionmentioning

confidence: 99%

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Top income shares and aggregate wealth-income ratio in a two-class corporate economy

Ryoo

2017

Cambridge Journal of Economics

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This paper examines some determinants of top income shares and the aggregate wealthincome ratio in the United States. The paper, first, points out the di culties in Piketty's neo-classical version of explanation of US income inequality, which stresses the e↵ect of the rising aggregate wealth-income ratio and high elasticity of factor substitution. Second, the analysis, based on a Cambridge two-class model along the lines of Kaldor (1955Kaldor ( /56, 1966 and Pasinetti (1962), highlights the role of financialization in increasing inequality. Third, the analysis suggests that the rise in the aggregate wealth-income ratio from 1980 to 2007 in the US is explained mostly by asset price inflation, not by technical relations. Finally, the analysis examines the e↵ects of the slowdown in capital accumulation on income distribution and wealth-income ratios, which are very di↵erent from those in Piketty's Capital in the twenty first century.keyword top income share, wealth-income ratio, financialization, top management pay, stock-flow consistency JEL classification E12, E21, E25, E44

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Section: A Cambridge Two-class Corporate Economymentioning

confidence: 99%

“…Following the approach in Skott (1981Skott ( , 1989 and Skott and Ryoo (2008), households' saving/portfolio behavior is specified in terms of their desired stock-flow ratios:…”

Section: The Model Needs To Address the Increasing Importance Of Manamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Top income shares and aggregate wealth-income ratio in a two-class corporate economy

Ryoo

2017

Cambridge Journal of Economics

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“…Stockhammer (2007) defines the financialization as a process where movement towards market-based financial systems, the emergence of the institutional investors as main players in the financial markets, and the change of the management mindset in both financial and non-financial corporations towards shareholder maximization occur as it progresses (Stockhammer, 2007: 2). Stockhammer (2004), Crotty (2005), and Skott and Ryoo (2008) mostly concentrate of the macroeconomic consequences of financialization and they define this term as the transformation in the relationship between the financial and the non-financial markets. Froud et al (2001) analyzes financialization on the micro level.…”

Section: The Concept Of Financializationmentioning

confidence: 99%

Financialization of Turkey Industry Sector

Tellalbaşi¹,

Kaya²

2013

International Journal of Financial Research

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Financial markets in the world, especially for the last three decades, have been evolving significantly in terms of market volumes, operational intensity, institutional and regulations as well as the authorities governing them. The increase in operational volumes and the changing nature of financial markets, creations of new financial products; led to the increase of the importance of financial capital and how it affected day to day life directly became one of the most important theoretical problems. Thus, the transformation witnessed in the financial markets led to a new era, dubbed as "financialization". In this article, the financialization of companies listed in the Istanbul Stock Exchange's Industrial Index is analyzed using an econometric technique known as Generalized Method of Moments. The quantitative analysis has used two distinct methods to measure the relationship between firms' investments and their debts, financial profits, sales and financial payments, variables that constitute variables for measuring financialization. Both models revealed a negative relationship between higher financial benefits and amount of investments.

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“…When many firms attempt to move to the left along their individual expansion frontiers, they will experience a downward shift of these expansion frontiers, due to the adverse aggregate demand effect. This fallacy of composition seems to be neglected in much of the political economy and even macroeconomics literature on 'financialisation' (see Skott/Ryoo, 2008a, andvan Treeck, 2008b, for a critique). In what follows, we develop a general framework describing the macroeconomic implications of 'financialisation' in terms of private investment and consumption decisions.…”

Section: 'Financialisation' and Aggregate Demandmentioning

confidence: 99%

‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review

Hein¹,

Treeck²

2010

Handbook of Alternative Theories of Economic Growth

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe review recent attempts to integrate 'financialisation' processes into Post-Keynesian distribution and growth models and distinguish three principal channels of influence: 1. objectives and finance restrictions of firms, 2. new opportunities for households' wealth-based and debtfinanced consumption, and 3. distribution between capital and labour, on the one hand, and between management and workers on the other hand. Starting from a re-interpretation of the Post-Keynesian theory of the firm we bridge the gap between micro-and macro-analysis of 'financialisation' and we trace the main characteristics and effects of 'financialisation' from the micro to the macro level taking into account stock-flow interactions. Our review of the theoretical literature on 'financialisation' shows that expansive effects may arise under certain conditions, in particular when there are strong wealth effects in firms' investment decisions (via Tobin's q) and in households' consumption decisions. However, our review also suggests that even an expansive finance-led economy may build up major financial imbalances, i.e. increasing debt-capital or debt-income ratios, which make such economies prone to financial instability.JEL code: E12, E21, E22, E25, E44

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Macroeconomic implications of financialisation

Cited by 168 publications

References 18 publications

Top income shares and aggregate wealth-income ratio in a two-class corporate economy

Top income shares and aggregate wealth-income ratio in a two-class corporate economy

Financialization of Turkey Industry Sector

‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review

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