GOVERNMENT DEFICITS IN POST-KEYNESIAN THEORIES OF GROWTH AND DISTRIBUTION

This paper examines the role of the government sector in post-Keynesiantheories of growth and distribution. It shows the possibilityof reconciling two views on income distribution, present inthe post-Keynesian tradition, which the literature has consideredalternative. By following Kaldor's suggestions on the role thatmonetary and fiscal policy can play in maintaining steady growthconditions, we find that distributive variables depend bothon the rate of growth of the economy, as pointed out by Kaldorand Pasinetti, and on the money rate of interest, as suggestedby Sraffa and by the subsequent elaborations of a monetary theoryof distribution. The paper first verifies the validity of thePasinetti theorem and the dual theorem, and shows that thesetheorems do not always hold when the government sector is explicitlyconsidered. It extends the analysis to the case of the corporateeconomy and institutional distribution, clarifying limits tothe neo-Pasinetti theorem related to the assumption of an endogenousvaluation ratio in steady-growth equilibrium and to the factthat this theorem does not hold when real capital investmentis also financed through the issue of firms' bonds.