The Importance of the Retention Ratio in a Kaleckian Model With Debt Accumulation

Sasaki, Hiroaki; Fujita, Shinya

doi:10.1111/j.1467-999x.2011.04143.x

Cited by 27 publications

(35 citation statements)

References 8 publications

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“…The question of dynamic stability of regimes has been further debated, and models have been presented with less restrictive results regarding instability, if dividends, capital gains, Tobin's q and other features are included (Sasaki/Fujita 2012, Franke 2016. Furthermore, authors like Charles (2008aCharles ( , 2008bCharles ( , 2008c, Lima/Meirelles (2007), Meirelles/Lima (2006), Nishi (2012b) and Ryoo (2013), have introduced Minsky's (1986) distinction between hedge, speculative and Ponzi financing into different variants of Kaleckian distribution and growth models, and they have provided richer models with several more regimes and sources of instability.…”

Section: The Integration Of Interest and Credit Into Post-keynesian Dmentioning

confidence: 99%

Post-Keynesian macroeconomics since the mid 1990s: main developments

Hein

2017

European Journal of Economics and Economic Policies: Intervention

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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 AbstractIn this paper the main developments in post-Keynesian macroeconomics since the mid1990s will be reviewed. For this purpose the main differences between heterodox economics in general, including post-Keynesian economics, and orthodox economics will be reiterated and an overview over the strands of post-Keynesian economics, their commonalities and developments since the 1930s will be outlined. This will provide the grounds for touching upon three important areas of development and progress of postKeynesian macroeconomics since the mid-1990s: first, the integration of distribution issues and distributional conflict into short-and long-run macroeconomics, both in theoretical and in empirical/applied works; second, the integrated analysis of money, finance and macroeconomics and its application to changing institutional and historical circumstances, like the process of financialisation; and third, the development of full-blown macroeconomic models, providing alternatives to the mainstream 'New Consensus Model' (NCM), and allowing to derive a full macroeconomic policy mix as a more convincing alternative to the one implied and proposed by the mainstream NCM, which has desperately failed in the face of the recent crises.

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Section: The Integration Of Interest and Credit Into Post-keynesian Dmentioning

confidence: 99%

Post-Keynesian macroeconomics since the mid 1990s: main developments

Hein

2017

European Journal of Economics and Economic Policies: Intervention

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“…In our model, the regime of rate of capital accumulation depends on the level of endogenous variable, e k; this differs from earlier studies (Hein 2007;Lavoie 1995;Sasaki/Fujita 2012;Taylor 2004). For example, if the steady-state value of the capital-effective labor supply ratio is sufficiently large, the rate of capital accumulation in the steady state exhibits a debt-burdened regime.…”

mentioning

confidence: 56%

Pro-shareholder income distribution, debt accumulation, and cyclical fluctuations in a post-Keynesian model with labor supply constraints*

Sasaki

Fujita

2014

EJEEP

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In modern capitalist economies, income distribution has a tendency to be in favor of shareholders. This paper interprets pro-shareholder distribution as a decrease in the retention ratio of firms and an increase in the profit share. We introduce labor supply constraints into a post-Keynesian growth model with debt accumulation and investigate the effects of changes in the natural rate of growth, retention ratio, profit share, and interest rate on the rate of capacity utilization and the financial structure of firms. We further analyse the stability of the steady-state equilibrium and the transitional dynamics toward the equilibrium and show that, depending on conditions, there could be cyclical fluctuations such that the financial structure changes periodically between speculative finance and Ponzi finance.

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“…These expenditures are rather strictly proportional to their returns R . Accordingly, with an average propensity to save s R ,

p C_{R} = (1 - s_{R}) R

The main difference between the contributions by Hein () and Sasaki and Fujita () is the treatment of the dividend payments of the firms. The latter (like many others) assume that the dividends are a fixed proportion of the firms’ profits net of the debt service, whereas Hein assumes that they are proportional to the value of the firms on the stock market.…”

Section: The Short‐run Equilibriummentioning

confidence: 99%

“…In a follow‐up paper, Sasaki and Fujita (, p. 423) point out that the algebraic condition for the puzzling case requires unreasonably high levels of the rate of interest. Their investigation then goes on to study the case of positive dividend payments to the shareholders, which with reference to the net profits of the firms are determined by a fixed retention rate less than one.…”

Section: Introductionmentioning

confidence: 99%

“…Sasaki and Fujita's () contribution is interesting in that it raises the explicit question of whether a model or certain scenarios in it are compatible with a number of obvious empirical facts. The authors tackle this problem by assigning numerical values to, especially, a couple of parameters in the investment function (which they borrow from other literature), and then look what they imply for the interest rate.…”

Section: Introductionmentioning

confidence: 99%

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A Supplementary Note on Professor Hein's (2013) Version of A Kaleckian Debt Accumulation

Franke

2015

Metroeconomica

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Within the framework of the Kaleckian baseline model where firms finance investment by equities and debt, this note is concerned with a recent proposal by E. Hein to replace the common concept of a given retention rate with a given dividend rate. Considering in more detail the implications of his additional assumption of constant stock prices, it is revealed that the retained earnings of the firms will then be non‐positive in a long‐run financial equilibrium. It is furthermore shown that another and empirically more plausible assumption on the firms’ equity issuance policy overcomes this deficiency and can also imply numerically acceptable retention rates.

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The Importance of the Retention Ratio in a Kaleckian Model With Debt Accumulation

Cited by 27 publications

References 8 publications

Post-Keynesian macroeconomics since the mid 1990s: main developments

Post-Keynesian macroeconomics since the mid 1990s: main developments

Pro-shareholder income distribution, debt accumulation, and cyclical fluctuations in a post-Keynesian model with labor supply constraints*

A Supplementary Note on Professor Hein's (2013) Version of A Kaleckian Debt Accumulation

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