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Some Optimal Aspects In A Two Class Growth Model With A Differentiated Interest Rate

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  • Pietro Balestra
  • Mauro Baranzini

Abstract

This paper explores the consequences of the rejection of the hypothesis of the equality between the profit rate and the interest rate in a two class model of economic growth. With a differentiated interest rate, the well‐known (Pasinetti's) independence of the equilibrium profit rate with respect to the propensity to save of the workers is no longer valid. The general solution of the model for this case is given. Looking at optimal growth, the present paper develops two distinct arguments. First, in a traditional manner, the conditions under which there exists an interest rate which maximizes per capita consumption are established. Second, in a more original way, the usual criterion of optimal growth is replaced by the criterion of maximum workers' consumption, a not unreasonable criterion in a two‐class economy. The maximizing conditions for this case are derived. In dieser Arbeit werden die Konsequenzen einer Ablehnung der Hypothese untersucht, dass in einem Zwei‐Klassen‐Modell des wirtschaftlichen Wachstums die Profitrate and der Zinssatz gleich hoch seien. Bei einer unterschiedlichen Zinsrate verliert die (von Pasinetti) bekannte Unabhängigkeit der gleichgewichtigen Profitrate von der Sparneigung der Lohnempfänger ihre Gültigkeit. Für diesen Fall wird die generelle Lösung des Modells vorgeführt. Unter dem Aspekt des optimalen Wachstums werden zwei Aussagen entwikkelt: erstens werden die Bedingungen, unter welchen ein Zinssatz existiert, der den Pro‐Kopf‐Konsum maximiert, abgeleitet; zweitens wird das ubliche Kriterium fur optimales Wachstum durch das Kriterium des maximalen Konsums derArbeitnehmer ersetzt. Dies neue Kriterium erscheint in einem Zwei‐Klassen‐Modell als nicht abwegig. Die Maximierungsbedingungen werden für diesen Fall abgeleitet. Dans un modèle de croissance à deux classes (salariés et capitalistes), l'indepèndance du taux de profit en équilibre dynamique par rapport à la propension àépargner des ouvriers n'est plus valable lorsqu'on abandonne l'hypothese d'égalité entre le taux d'interet et le taux de profit. Les résultats d'un modèle à deux classes avec taux d'intérêt différencié sont dérivés. Par rapport è la croissance optimale, deux aspects différents sont traités. Premièrement, dans une optique traditionnelle, on cherche les conditions d'existence d'un taux d'intérêt qui maximise la consommation par tête. Deuxièmement, suivant une idée plus originale, on remplace le critere usuel d'optimalité par celui de la maximisation de la consommation ouvriere. Les conditions d'optimalite dans un pareil cas sont dérivées.

Suggested Citation

  • Pietro Balestra & Mauro Baranzini, 1971. "Some Optimal Aspects In A Two Class Growth Model With A Differentiated Interest Rate," Kyklos, Wiley Blackwell, vol. 24(2), pages 240-256, May.
  • Handle: RePEc:bla:kyklos:v:24:y:1971:i:2:p:240-256
    DOI: 10.1111/j.1467-6435.1971.tb00808.x
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    Cited by:

    1. Stefan Ederer & Maximilian Mayerhofer & Miriam Rehm, 2021. "Rich and ever richer? Differential returns across socioeconomic groups," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 44(2), pages 283-301, April.
    2. Baranzini, Mauro L. & Mirante, Amalia, 2021. "Pasinetti's theorem: A narrow escape, for what was to become an inexhaustible research programme," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 470-481.
    3. Ghassan, Hassan Belkacem, 2012. "Banking Stability System: Does it Matter if the Rate of Return is Fixed or Stochastic?," MPRA Paper 54391, University Library of Munich, Germany.
    4. Mauro Baranzini, 1975. "A Two-Class Monetary Growth Model," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 111(II), pages 177-189, June.
    5. Heinz D. Kurz & Neri Salvadori, 2010. "The Post-Keynesian Theories of Growth and Distribution: A Survey," Chapters, in: Mark Setterfield (ed.), Handbook of Alternative Theories of Economic Growth, chapter 4, Edward Elgar Publishing.
    6. Usamah Uthman, 2006. "Profit-sharing versus interest-taking in the Kaldor-Pasinetti theory of income and profit distribution," Review of Political Economy, Taylor & Francis Journals, vol. 18(2), pages 209-222.

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