Viability and Corridor Stability in Keynesian Supply‐Driven Growth

In this paper we reconsider and generalize a two‐dimensional growth cycle model of Skott that is based on supply‐side adjustment mechanisms and a Kaldorian theory of income distribution. This model gives rise to degenerate Hopf bifurcations if behaviour (in terms of rates of growth) is linear close to the steady state. Furthermore full capacity limits lead to viable dynamics from the global point of view if the steady state is locally attracting and to corridor stability with persistent fluctuations when it is repelling. These findings can to some extent also be obtained for a three‐dimensional growth cycle extension of the Skott model, which includes real wage dynamics as in Rose's employment cycle, now turned into economically viable dynamics through appropriate non‐linearities in the assumed adjustment processes of output and prices in the case when the steady state is locally repelling.     

WAGE POLICY IN AN OPEN‐ECONOMY KALECKI–KALDOR MODEL: A SIMULATION STUDY

This paper discusses a Post‐Keynesian model of income, production and trade. The one‐country, one‐sector model features Kaleckian investment demand, Kaldorian productivity and a labor market module based on a wage–price spiral. The model is first presented for a closed economy with exogenous real wages; second, for a closed economy with endogenous real wages; third, for an economy open to trade with endogenous real wages. Simulations with different calibrations show key characteristics of the model. Monte Carlo simulations over reasonable parameter ranges shed some light on the effectiveness of wage policies in open economies.     

Structural change and cumulative causation: A Kaldorian approach

This paper presents a multisectoral model based on Kaldor's approach to explain the importance of structural change and cumulative causation. Divergence in countries' growth rates in Kaldorian models are explained either by different degrees of increasing returns among sectors on the supply side or by different income elasticities of exports and imports on the demand-side, but it is not explained by both factors together. In this vein, a multisector growth model that combines different sectoral income elasticities and different sectoral increasing returns is built to explain how structural changes toward high-tech industries can trigger a process of cumulative causation and ensure higher growth rates in the long run.     

Mergers and acquisitions in Latin America 1990–2014: Factorial distribution and contractionary impacts

The evolution of mergers and acquisitions (M&A) in Latin America from 1990 to 2014 is analyzed herein. A one‐sector production model without government and external sectors that links prices/costs, income distribution, demand and output is proposed, and the effects of changes in M&A on profit margins, income distribution and gross domestic product (GDP) are evaluated. The model is applied to most regional economies to determine the impact of these transactions on the profit share and level of economic activity. Our analysis does not reject the hypotheses that M&A have distributive effects favorable to profits and that they have contractionary effects on GDP in Latin American countries.     

Wage Hikes as Supply and Demand Shock

Wage hikes affect production costs and hence are usually analysed as supply shocks. There is a long‐standing debate, however, about demand effects of wage variations. In this paper, we bring together these two arguments in a Kaldorian model with group‐specific saving rates and a production technology that allows for redistribution between workers and entrepreneurs following a wage hike. We thereby pinpoint the conditions under which (a) wage variations affect aggregate demand and (b) the positive demand effects of wage hikes may even overcompensate the negative supply effects on aggregate employment (‘purchasing power argument’). We conclude by noting that, whereas demand effects are very likely to occur, the conditions under which the purchasing power argument does indeed hold are very unrealistic.     

SOCIAL SECURITY TAX AND ENDOGENOUS TECHNICAL CHANGE IN AN ECONOMY WITH AN AGING POPULATION

This paper presents a classical model of economic growth which incorporates class conflict and induced technological change to show how demographic changes can affect future income distribution and production relations in industrialized countries. Specifically, I use an extended real wage Phillips curve to account for the effects of a social security tax on income distribution and therefore on capital accumulation and employment. In this framework output growth is determined from the supply side by available savings. Analytical and simulation results indicate that the sustainability of an economy with fast population aging over transient paths hinges upon improvements in labor productivity, hence, the specific mechanism of technical progress in place.     

TWO ALTERNATIVE APPROACHES TO FINANCIAL MODEL BUILDING

The paper compares the long and the short period models presented by Tobin and those that can be derived from the writings of Kaldor. It presents a Kaldorian model where the government deficit is financed through bonds and money, where inflation can occur, financial assets are allocated through portfolio decisions, and Kaldor's characterization of monetary and fiscal policies are taken into account. The model clarifies under which conditions the “Cambridge Equation” holds and reconciles two different Post-Keynesian views on income distribution, since distributive variables are made to depend both on the rate of growth and on the money rate of interest.     

Balance‐of‐payments‐constrained cyclical growth with distributive class conflicts and productivity dynamics

This study builds a dynamic balance‐of‐payments‐constrained model that incorporates the endogenous determination of the economic growth rate, conflictive wage/price distribution and employment rate. The wages, commodity prices and employment rate are determined by the profit squeeze effect and labour‐saving technical change. The relative strength of these two effects generates different outcomes for the transitional dynamics and comparative statics analysis. Particularly, the model shows stability, instability and cyclical nature, the latter of which concurs with the evidence reported by previous empirical studies.     

THE PROFIT–INVESTMENT–UNEMPLOYMENT NEXUS AND CAPACITY UTILIZATION IN A STOCK‐FLOW CONSISTENT MODEL

This paper studies under which conditions the share of profit in value‐added, financial constraints on investment and capital shortage may foster unemployment and may limit the growth of capital and/or the growth of aggregate demand, in a stock‐flow consistent model. The efficiency of demand‐side versus supply‐side economic policies (decrease of the real interest rate and/or of the real wage, increase of the leverage ceiling constraint) depends on capital shortage and credit rationing, which are not necessarily simultaneous due to the effects of investment on aggregate demand and supply.     

Impacts of Trade Liberalisation Commitments on the Vietnamese Economy: A CGE Approach

This article quantifies the economic effects of tariff reduction following Vietnam's WTO accession. It differs from previous studies in several aspects. First, the model incorporates non‐standard features of the Vietnamese economy (e.g. changes in the domestic tax system). Second, the model divides Vietnamese households into 10 groups, allowing for the assessment of household welfare and income distribution. Third, the model has been run employing the most up‐to‐date database available. The major findings are summarised as follows. First, Vietnam as a whole would benefit from trade liberalisation. Second, the overall gain would be accompanied by a redistribution of income and a moderate increase in inequality between the rich and the poor. Third, concerning sectoral output, export‐oriented sectors, sectors with large shares of input in total imports, and those with increased domestic demands are likely to expand, whereas, in contrast, domestic‐oriented sectors are likely to contract. Measures to increase labour mobility, target disadvantaged groups and areas, and further liberalise service sectors are recommended as the recipe for effective utilisation of integration, as well as a more equitable pattern of growth.     

Pricing and hedging American fixed‐income derivatives with implied volatility structures in the two‐factor Heath–Jarrow–Morton model

Most previous empirical studies using the Heath–Jarrow–Morton model (hereafter referred to as the HJM model) have focused on the one‐factor model. In contrast, this study implements the Das ( 1999 ) two‐factor Poisson–Gaussian version of the HJM model that incorporates a jump component as the second‐state variable. This study aims at examining the performance of the two‐factor model through comparing it with the one‐factor model in pricing and hedging the Eurodollar futures option. The degree of impact arising from the jump factor also is examined. In addition, three new volatility specifications are constructed to enhance further the pricing performance of the model. Their performances are compared according to three performance yardsticks—in‐sample fitting, out‐of‐sample pricing, and the hedging test. The result indicates that the two‐factor model outperforms the one‐factor model in both the in‐sample and out‐sample price fitting, but the one‐factor model performs better in the hedging test. In addition, the HJM model, coupled with the proposed volatility specification, leads to good fitting results that will be of considerable use to practitioners and academics in guiding model choice for interest‐rate derivatives. © 2002 Wiley Periodicals, Inc. Jrl Fut Mark 22:839–875, 2002     

The La Marca model revisited: Structuralist goodwin cycles with evolutionary supply side and balance of payments constraints

This research is aimed at investigating the causes of volatility that affect middle‐income countries by studying the La Marca model. Drawing from the open‐economy Goodwin tradition, this model demonstrates that economic activity, income distribution and accumulation of foreign assets dynamically interact, resulting in a pattern of dampened cycles. The study consists in analyzing the characteristics of the model by initially imposing: (I) a constant real exchange rate; (II) a constant net external asset to capital ratio, which is in line with the balance of payments dominance theory and (III) a fixed income distribution. We then (IV) expand the original model by adding an evolutionary supply‐side in which productivity is at the center of the economic dynamic through international technology transfer and the Kaldor‐Verdoorn effect. The results show that (1) the model always converges. (2) The restrictions (I) and (II) remove the cyclical component of the model, which highlights a central difference between La Marca and the original Goodwin model. (3) Fixed income distribution leads to a monotonic trajectory that reduces oscillations. (4) The inclusion of productivity dynamics generates new sources of volatility in the relationship between productivity, capacity utilization and net external assets and is in line with the structuralist argument of structural fragility.     

Satiated Consumers: Allocation of Consumption Time in an Affluent Society

Based on Ian Steedman's seminal contribution ‘Consumption Takes Time’, we propose a formal activity‐based model for consumer behaviour. The model simultaneously incorporates choices over consumption time, as well as quantities and qualities of products consumed. We identify and examine preconditions for satiation with products and draw implications for economic policy. Satiation with products explains the limited effects of price or income changes on demand and questions the pertinence of economic growth for development. It further highlights the relevance of working time reductions for well‐being.     

A Leibenstein–Hobbes–Walras Model of Sharecropping

Circumstances under which share tenancy may emerge as a socially viable and incentive-compatible system of land-labor exchange are explored in a model incorporating Leibenstein’s nutrition-effort hypothesis, limited substitution possibilities and endogenous distribution. The model provides a Walrasian resolution of the traditional conundrum of production control under sharecropping. It is shown that a pure sharecropp ing equilibrium with tenant control exists when land is relatively abundant though land rent is zero under either a fixed-rent or wage system. With land relatively scarce, a nearly-symmetric equilibrium with landlord control also exists provided workers share income in the presence of unemployment.     

Small and Medium‐Sized Enterprises' Collaborative Buyer–Supplier Relationships: Boundary Spanning Individual Perspectives

Boundary‐spanning individuals (BSIs) play a critical role in supply chain management, especially in small and medium‐sized enterprises (SMEs) where interactions with buyers and suppliers can depend heavily on just a few individuals. This study, utilizing data from Korean manufacturing‐sector SMEs, explores whether cooperative social value orientations of SMEs' BSIs influence the effects of collaborative buyer‐supplier initiatives. The results suggested that the performance implication of decision‐sharing initiative increases when BSIs have a high level of cooperative social value orientation. However, it also negatively moderates the relationship between risk/benefit sharing (involving financial losses or gains) and performance suggesting possible negative side effects. However, we found that such orientation also negatively moderates the relationship between risk/benefit sharing (involving direct financial losses or gains) and relationship performance suggesting possible negative side effects.     

THE WAGE–WAGE‐ . . . ‐WAGE–PROFIT RELATION IN A MULTISECTOR BARGAINING ECONOMY

The equalization of profit rates across industries subject to firm‐level bargaining over wages generates an interindustry wage structure with higher wages in capital‐intensive sectors. The familiar inverse wage–profit relation gives way to a wage–wage‐ . . . ‐wage–profit surface on which the profit rate can vary directly with the wage paid in an individual industry. Institutional changes that decrease workers' bargaining power and increase the incomes of the unemployed tend to compress the wage distribution; these changes draw political support from cross‐class coalitions of low‐wage workers and capital‐intensive firms. Some capital‐using, labor‐saving technical changes that raise capitalists' profits in current prices lower the equilibrium profit rate.     

The effect of perceived economic mobility on customer aggression toward service employees: A darker aspect of customer behavior

The current research illuminates perceived economic mobility (PEM) as a causal antecedent of customer aggression. Study 1 with large‐scale panel data shows that PEM is positively related to attribution of poverty to personal characteristics and self‐centered intention to change jobs. Study 2 based on an experimental design shows that PEM causally induces customer aggression. Study 3 reveals that the effect of PEM on customer aggression varies depending on income; PEM increases customer aggression among low‐income earners, but the effect disappears among high‐income earners. Study 4 examines control over service employees to get self‐beneficial outcomes as a mechanism for the interaction effect of PEM and income on customer aggression. A moderated mediation analysis shows that the indirect effect of PEM on customer aggression through the proposed mechanism is significant among low‐income earners but not among high‐income earners. In sum, main findings of the present article are threefold: (a) PEM induces customer aggression, (b) income moderates the causal relationship, and (c) control to get benefits explains the joint effect of PEM and income on customer aggression. By delineating the dark side of PEM in consumer behavior, this study provides useful marketing implications for lessening side effects.     

Competitive Exchange Rate and Public Infrastructure in a Macrodynamic of Economic Growth

We develop a dual open‐economy model which incorporates a flow of public infrastructure as a factor of production to investigate effects of a competitive exchange rate policy under different levels of provision of public infrastructure. It is suggested that an exchange rate policy coordinated with a public infrastructure policy should produce better results. By increasing productivity in the tradable sector and reducing inflationary pressures, this supply‐side public policy contributes to the success of an economic growth strategy led by a competitive currency.     

Income Per Capita Inequality in China: The Role of Economic Geography and Spatial Interactions

(1241) Laura Hering and Sandra Poncet This paper contributes to the analysis of growing income inequality in China. We apply a structural model of economic geography to data on per capita income over 190 Chinese cities between 1995 and 2002, and evaluate the extent to which market proximity and spatial dependence can explain the growing income inequality between Chinese cities. The econometric specification explicitly incorporates spatial dependence in the form of spatially‐lagged per capita income. We show that the geography of market access and spatial dependence are significantly correlated with per capita income in China. Market access is particularly important in cities with smaller migration inflows, which is consistent with NEG theory, whereas spatially‐lagged per capita income matters more in cities with greater immigration. We conclude that the positive impact of spatially‐lagged income partly results from labour mobility between neighbours, so that spatial dependence reflects the influence of migration, knowledge transfers and increasing competition between cities.     

THE PUBLIC SECTOR IN A MODEL OF GROWTH AND DISTRIBUTION À LA PASINETTI: EXISTENCE OF ONE‐ OR TWO‐CLASS ECONOMIES

This paper explores the implications of different regimes of taxation and fiscal policies on the existence of a one‐ or two‐class economy in the Kaldor–Pasinetti approach of growth and income distribution. A simple model and its diagrammatical representation provide a complete taxonomy of the possible steady state equilibria and synthesize some early and recent contributions. It shows that the distribution among factors and the personal distribution among socio‐economic classes depend on the fiscal policy of the government, the behavioural parameters of actors and technology; but, provided that some conditions are fulfilled, the Cambridge Theorem and its distributional implications hold.