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Cambridge Equation and the Neo-Pasinetti Theorem in post-Keynesian models of growth and distribution

Author

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  • José Luis Oreiro
  • Luís Carlos G. de Magalhães

Abstract

Throughout this article we try to evaluate the theoretical robustness of the so-called New Theorem of Pasinetti, according to which in an economy in which the differentiation between the propensities to save from the profits and the salaries is due to the nature of the business income, not the affiliation to a specific social class; the rate of profit along the Golden Age growth path is independent of workers 'propensity to save, being determined by the firms' profit retention coefficient, by the fraction of the investment firms wish to finance with third-party resources and by the natural rate growth. JEL Classification: E11; E12; G11; O42.

Suggested Citation

  • José Luis Oreiro & Luís Carlos G. de Magalhães, 2019. "Cambridge Equation and the Neo-Pasinetti Theorem in post-Keynesian models of growth and distribution," Brazilian Journal of Political Economy, Center of Political Economy, vol. 39(3), pages 485-508.
    • Handle: RePEc:ekm:repojs:v:39:y:2019:i:3:p:485-508:id:45
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    More about this item

    Keywords

    Growth and distribution; Cambridge Equation; Neo-Pasinetti Theorem;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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