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

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.     

INTEREST RATE,DEBT, DISTRIBUTION AND CAPITAL ACCUMULATION IN A POST‐KALECKIAN MODEL

In the present paper we extend Lavoie's (Metroeconomica, 1995, vol. 46, pp. 146–177) ‘Minsky–Steindl’ model, building our analysis on a Kaleckian distribution and growth model which has already taken into account distribution effects of interest rate variations on the short‐run equilibrium. Into this model the effects of debt and debt services are explicitly introduced and the effects of interest rate variations on the short‐ and the long‐run equilibrium are derived. It is shown that the effects of interest rate variations on the endogenously determined equilibrium values of the model not only depend on the parameter values in the saving and investment functions but also on the interest elasticity of distribution and on initial conditions with respect to the interest rate and the debt–capital ratio.     

MICRO EMPIRICAL RESULTS OF A KALECKIAN-TYPE CAPITAL ACCUMULATION MODEL COMPARED WITH MACRO RESULTS FOR SOME EUROPEAN ECONOMIES

A micro economic model of the rate of capital accumulation that corresponds to a macro Kaleckian-type post-Keynesian investment function is hypothesized. Firm-level accounting data on industrial and commercial firms over the time period 1994–2000 for three European economies and the USA are used to test the consistency of the micro model with the macro model of Hein and Ochsen (2003, Metroeconomica, 54, pp. 404–33). The micro empirical results were very consistent with the macro results, suggesting a strong micro foundation to the macro investment function. In addition country differences and industry differences were included in the analysis.     

HYSTERESIS IN THE KALECKIAN GROWTH MODEL: A BAYESIAN ANALYSIS FOR THE US MANUFACTURING SECTOR FROM 1984 TO 2007

Responding to the Classical criticism of the baseline Kaleckian growth model which is not fully adjusted in the long run, post‐Kaleckians have proposed model variants that imply the economy to converge to a steady state in which the realized and the normal utilization rates as well as the realized and the expected secular rate of sales growth are congruent. Convergence is caused by endogenous adjustments of the conventional rates to their respective realized rates which is theoretically justified by hysteresis effects. Using a dynamic linear specification of the Kaleckian investment function in state‐space form and by the aid of the Kalman filter, this paper studies the endogeneity of the normal utilization rate and the expected secular rate of sales growth empirically for the US manufacturing sector and its sub‐sectors. We find evidence for an endogenous adjustment of both variables.     

THE INFLUENCE OF DIFFERENT FORMS OF GOVERNMENT SPENDING ON DISTRIBUTION AND GROWTH

This paper deals with the influence of different types of government expenditure on growth in a post‐Keynesian framework. The analysis considers a government sector with a balanced budget and an autonomous and non‐linear investment function, interpreted along a Kaleckian and a Classical‐Harrodian line. It shows under which conditions different types of government expenditure are beneficial or detrimental for economic growth, comparing some results with those reached by Barro in his 1990 Journal of Political Economy article, and points out the emergence of phenomena like multiple equilibria, hysteresis and low growth traps.     

A NOTE ON METROECONOMICA: SHACKLE'S CONTRIBUTION

In the 1950s Shackle contributed a number of important articles to Metroeconomica, a new economic journal founded by Eraldo Fossati in 1949 and published in Trieste (Italy). The journal gave considerable prominence to Shackle's theory of decision under uncertainty through publication of many articles, but, above all, through publication of the proceedings of a symposium held in 1959 and entitled ‘Shackle's theory on decision’. The aim of this note is to clarify why Metroeconomica gave particular importance to Shackle's perspective.     

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

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.     

FACTOR SHARES,BUSINESS CYCLES AND THE DISTRIBUTIVE LOOP

This paper looks at how factor shares vary over the business cycle and how their movements fit into Kaleckian analysis. Heterodox accounts of factor‐share movements include both profit‐squeeze arguments (procyclical wage share) and underconsumption arguments (countercyclical wage share). Empirical evidence gives no decisive support for either account: factor shares may be procyclical and countercyclical at different stages of the business cycle. If factor shares vary in such a complex way, then Kaleckian models cannot have a stable distributive curve. The economy instead follows a distributive loop, with different adjustment paths during an upswing and a downswing.     

The economics of the super‐multiplier: A comprehensive treatment with labor markets

This paper links the super‐multiplier to Keynesian macroeconomics, showing it to be the most Keynesian of growth perspectives. Next, the paper shows that the super‐multiplier is a micro‐economically coherent theory of investment and capital accumulation. Firms’ decisions regarding capital accumulation coordinate demand and supply growth in goods markets. The paper then explores the implications of incorporating the super‐multiplier in the neo‐Kaleckian and Cambridge growth models. Lastly, it shows how labor markets and unemployment can be added into super‐multiplier models to provide a comprehensive growth model that addresses Solow's (1956, Journal of Economics, 70, 65–94) labor market knife‐edge problem. Incorporating labor markets does not change the fundamental super‐multiplier result that growth is determined by the growth of autonomous demand.     

A STEINDLIAN MODEL OF CONCENTRATION,DEBT AND GROWTH

Income distribution plays a crucial role in the Kaleckian models of growth. The recent US experience has seemingly turned the Kaleckian argument on stagnationism on its head. Does it, therefore, render the Kaleckian growth framework redundant? We argue that while there is a tendency towards underconsumption, there could be other counteracting tendencies like the wealth effect of the capitalists or the possibility of debt for the workers. But such a growth process, which is primarily driven by the asset price markets, is, by its very nature, iniquitous and extremely volatile and the downturn is far more severe than the normal business cycles.     

THE INTELLECTUAL FOUNDATION OF THE JOURNAL OF BUSINESS LOGISTICS AND ITS EVOLUTION BETWEEN 1978 AND 2007

Many logistics and supply chain management researchers have so far studied the nature of logistics and supply chain management research in terms of its domain and scope, its epistemological assumptions, and its evolution. However, the knowledge repository on which the scientific research community draws, that is, its intellectual foundation, has not yet been studied. Studying the intellectual foundation of research provides an unbiased and comprehensive picture of the development, dissemination, and utilization of its knowledge. In this article, we identify the most contributive works—in terms of citations received—that have been used in 497 articles published in the Journal of Business Logistics (JBL) between 1978 and 2007. By means of citation and co‐citation analysis, the intellectual structure of research in JBL is revealed and transformations therein are explored. Overall, the most frequently‐cited literature can be classified into six themes: physical distribution; inventory models; customer service; interorganizational relationships; competitive strategy; and empirical methodologies for socio‐scientific research. Furthermore, we determined a development in citation frequencies to these themes: literature related to physical distribution and inventory management declined over the three decades under study, whereas literature related to competitive strategy and empirical methods gained in importance. This development indicates a shift from an operational focus to a prioritization of managerial issues. Moreover, our results demonstrate a shift towards more relational and institutional research in logistics (management), which has been typically linked with the notion of supply chain management since the 1990's.     

A note on “raising the mandatory retirement age and its effect on long‐run income and Pay As You Go (PAYG) pensions”

Fanti (2014, Metroeconomica, 65, 619–645) showed that raising the mandatory retirement age always reduces capital accumulation and may lower per young income and pension benefit, under the assumption that old labor and young labor are perfect substitutes (or equivalently, the elasticity of substitution is infinite). We reexamine his analysis by assuming that the two labors are imperfect substitutes (the elasticity of substitution is finite), and prove that his results no longer hold when the elasticity of substitution is not sufficiently high.     

MODELS OF COMPETITION BETWEEN FIRMS: ENDOGENOUS MARKET STRUCTURE IN THE KALECKIAN MODEL

The purpose of this paper is to incorporate free entry into the Kaleckian model. To this end, we consider a model with monopolistic competition, mark‐up pricing and a free‐entry condition. Using this model, the Kaleckian model is unstable under a wage‐led growth regime, and it is stable under a profit‐led growth regime, when the interest rate is supposed to be constant. Stability under a wage‐led growth can be achieved if the interest rate is allowed to respond positively to capacity utilization. We also find that a goods market policy, but not an income distribution policy, is then effective from an economic growth perspective.     

Marxists and Accountants: bien étonnés de se trouver ensemble

In a recent issue of this journal, Basu (2013, Metroeconomica, 64 (2), pp. 293–318) presented some conditions under which replacement cost‐based profit rates and historical cost‐based profit rates evolve similarly, making, under these conditions, the choice between them irrelevant when studying long‐term profitability trends. The present note adds some realism to this analysis by allowing depreciation of fixed assets, and shows that the choice between the two profit rate operationalizations becomes relevant. Additionally, the impact of growth on the relation between the two profit rate evolutions is assessed.     

A MODEL OF THE FIRM'S DEMAND FOR MONEY UNDER UNCERTAINTY

Recently, economists have centered their explanation of the demand for money balances on the transactions motive. The roles of precautionary and speculative motives remain ambiguous. The purpose of this paper is to fill this void. We develop a static model of the individual firm's demand for money in which prices and the interest rate are assumed to be random variables. In this model, the entrepreneur must decide his money holdings ex ante, and both capital and labor inputs are determined ex post. The demand for money corresponding to the various motives is a consequence of analyzing the ex ante profit function. Implications for monetary policy are derived from this analysis.     

Redistribution in a Neo‐Kaleckian Two‐country Model

We investigate the interaction between demand‐driven growth and income distribution in open economies, by combining expenditure‐switching and demand spillover effects in a neo‐Kaleckian two country model. First, we specify elasticities of wage share and real exchange rate to the money wage relative to labor productivity, in order to precisely describe the distributive pass‐through from money wages to the labor share and the real exchange rate. Second, we analyze the demand effects of an increase in the money wage for given labor productivity (a redistribution towards labor) in both Home and Foreign country, as well as globally. We derive closed form results for two identical countries. These results indicate that redistribution towards labor at Home: (i) always increases growth globally if Home is wage‐led, but can lead to lower growth at Home relative to Foreign; and (ii) will always imply lower growth at Home relative to Foreign if Home is profit‐led, but can still be growth‐enhancing at Home. Thus, to the extent that countries are concerned with their relative economic performance, a fallacy of composition can emerge. Numerical simulations suggest that these fallacies could indeed occur. As a consequence, ‘returns to coordination’ over international labor policies might be substantial.     

A NOTE ON MAIL SURVEYS AND RESPONSE RATES IN LOGISTICS RESEARCH

Logistics researchers frequently use mail surveys to collect data. This paper documents the decline in response rates to surveys reported in JBL, and presents a content analysis of mail survey results reported in two leading logistics journals, the Journal of Business Logistics and the International Journal of Physical Distribution and Logistic Management. One interesting finding is the more questionnaires mailed out in a given study, the lower the response rate.     

DEMAND POLICIES FOR LONG‐RUN GROWTH: BEING KEYNESIAN BOTH IN THE SHORT AND IN THE LONG RUN?

The idea of demand‐led growth is defended by neo‐Kaleckians and neo‐Keynesians using very specific assumptions. In their models the paradox of costs is always valid in the long run. The central message of this paper is that these specific and strong assumptions are not needed to defend the Kaleckian perspective of a demand‐driven long‐run growth. What is needed is simply a less demanding theory of flexible mark‐ups in an open economy. The formal model developed in this paper shows that long‐run growth may be demand driven even when the paradox of costs does not hold in the long run.     

ON A GENERALIZED VON NEUMANN MODEL

The main aim of the paper is to give a constructive proof to an existence theorem concerning the generalized von Neumann model à la Morishima in a particular case which arises by dropping and replacing a strong continuity assumption of Morishima, whose existence theorem does not work (as the appendix example shows) when all of Morishima's other assumptions but that continuity assumption hold. In particular, the paper proves that the generalized von Neumann model à la Morishima has a solution when all people consume the same commodities in the same proportions, with a substitution effect equal to zero, even if some commodities are never consumed and not all processes require labour. Moreover, it shows a way to construct a solution by solving a Linear Complementarity Problem with Lemke's complementarity pivot algorithm.     

PROFITS,INVESTMENT AND BUSINESS FLUCTUATIONS

In this paper we analyze the impact of profits on investment in a simple Kaleckian investment model in which profits and capacity determine the level of investment. The analysis leads to the following conclusions. In the first place, the estimated impact of profits on investment behaviour in the Netherlands has diminished in the 1980s. The impact of the stock of capital on investment has remained constant in our sample period. In the second place, it can be observed that the impact of both profits and capital on investment is countercyclical. In periods of boom entrepreneurs prefer public capital markets as a source of investment funds, whereas in a recession they primarily rely on cheaper internal funds.