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European Economies in Light of the Keynesian cum Kaldorian Macroeconomic Distribution Theory: A Theoretical and Empirical Investigation

Author

Listed:
  • Michael ?llinger

    (Universit?t der Bundeswehr M¨¹nchen / Bundeswehr University Munich Institut f¨¹r Controlling, Finanz- und Risikomanagement, Germany)

  • Friedrich L. Sell

    (Universit?t der Bundeswehr M¨¹nchen / Bundeswehr University Munich Institut f¨¹r ?konomie und Recht der globalen Wirtschaft, Germany)

Abstract

In this paper, we present a combination of Keynesian and Kaldorian macroeconomic distribution theory. After a short literature review, we proceed to assessing the actual relevance of the original contributions of Keynes and Kaldor to the theory of macroeconomic income distribution. Thereafter, we put a combination of both approaches under an empirical test. An important outcome of our theoretical research is that the (total) savings ratio is an endogenous variable which is itself (among other factors which determine its equilibrium value) a positive function of the profit quota. In the empirical section of the paper, we first present the development of the saving quotas, of the profit quotas and of the total tax quotas among 8 European countries between 1999 and 2014. This time- period covers both phases of moderation (1999-2007) and of great economic crisis (2008-2014) in Europe. Furthermore, we conduct a linear regression analysis for the countries mentioned and find empirical support for a savings function in the vein of Nicholas Kaldor and of John Maynard Keynes.

Suggested Citation

  • Michael ?llinger & Friedrich L. Sell, 2019. "European Economies in Light of the Keynesian cum Kaldorian Macroeconomic Distribution Theory: A Theoretical and Empirical Investigation," Review of Economics & Finance, Better Advances Press, Canada, vol. 16, pages 59-75, May.
    • Handle: RePEc:bap:journl:190205
    Note: The authors dedicate this paper to Gerold Bl¨¹mle, Alois Oberhauser und Bernhard K¨¹lp. The authors presented it for the first time at the 83rd IAES conference (London: 14-17 March, 2018). We thank Reinhard Neck, Thomas Gries, Helena Sanz-Morales, and other participants of the session on ¡°Macroeconomic Theory and Policy II¡± for their helpful comments. We also thank anonymous referees for inspired suggestions.
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    References listed on IDEAS

    as
    1. David Bunting, 1991. "Savings and the Distribution of Income," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 14(1), pages 3-22, September.
    2. Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(4), pages 468-508, August.
    3. Nicholas Kaldor, 1955. "Alternative Theories of Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(2), pages 83-100.
    4. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    5. Friedrich L. Sell, 2015. "The New Economics of Income Distribution," Books, Edward Elgar Publishing, number 15663.
    6. Sell, Friedrich L. & Sauer, Beate, 2011. "A further view on current account, capital account and Target2 balances: Assessing the effect on capital structure and economic welfare," Working Papers in Economics 2011,2, Bundeswehr University Munich, Economic Research Group.
    7. Roy J. Rotheim, 1998. "Keynes and the Marginalist Theory of Distribution," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 20(3), pages 355-388, March.
    8. Man-Seop Park, 2001. "Kaldor’s “Institutional” Theory of Income Distribution Revisited: Different Views on the Nature of the Corporate Economy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(2), pages 313-327, December.
    9. Beate Sauer & Friedrich L. Sell, 2018. "Lost in translation – a revival of Wolfgang Stützel's Balances Mechanics," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 25(3), pages 401-427, May.
    10. Reto Foellmi, 2008. "Inequality and aggregate savings in the neoclassical growth model," IEW - Working Papers 395, Institute for Empirical Research in Economics - University of Zurich.
    11. Eckhard Hein & Carsten Ochsen, 2003. "Regimes of Interest Rates, Income Shares, Savings and Investment: A Kaleckian Model and Empirical Estimations for some Advanced OECD Economies," Metroeconomica, Wiley Blackwell, vol. 54(4), pages 404-433, November.
    12. John Cameron & Tidings Ndhlovu, 1999. "Keynes and the Distribution of Uncertainty: Lessons from the Lancashire Cotton Spinning Industry and the General Theory," Review of Social Economy, Taylor & Francis Journals, vol. 57(1), pages 99-123.
    13. Man-Seop Park, 2004. "Credit money and Kaldor's 'institutional' theory of income distribution," Review of Political Economy, Taylor & Francis Journals, vol. 16(1), pages 79-99.
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    More about this item

    Keywords

    Keynesian and Kaldorian Approaches to income distribution; Income distribution in European economies; Empirical estimates of savings function;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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