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Wage- and profit-led regimes under modern finance: an exploration

Author

Listed:
  • Amit Bhaduri

    (Jawaharlal Nehru University, New Delhi, India)

  • Srinivas Raghavendra

    (National University of Ireland, Galway, Ireland)

Abstract

This paper generalizes the principle of effective demand to incorporate banking and finance as two distinct sectors. The traditional commercial banking sector is regulated and the modern shadow banking sector is mostly an unregulated provider of financial services. Through a stylized model the interconnectedness between the two sectors is analysed. The analysis shows how an almost infinite supply-side capacity of finance is created and explores its relation to the level of aggregate demand in the real economy. The impact of finance on the real economy is explored in both profit- and wage-led regimes at different levels of interconnectedness between commercial and investment banking.

Suggested Citation

  • Amit Bhaduri & Srinivas Raghavendra, 2017. "Wage- and profit-led regimes under modern finance: an exploration," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(3), pages 426-438, July.
    • Handle: RePEc:elg:rokejn:v:5:y:2017:i:3:p426-438
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    File URL: https://www.elgaronline.com/view/journals/roke/5-3/roke.2017.03.05.xml
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    Citations

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    Cited by:

    1. Piacentini, P.M., 2021. "Minsky after Kalecki: real profits and financial structure," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 416-426.

    More about this item

    Keywords

    profit realization; securitization; commercial banking; investment banking; profit-led; wage-led; effective demand; financialization;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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