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On the (In-)stability and the Endogeneity of the Normal Rate of Capacity Utilization in a Post-Keynesian/Kaleckian ‘Monetary’ Distribution and Growth Model

In: Money, Distribution Conflict and Capital Accumulation

Author

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  • Eckhard Hein

Abstract

The Kaleckian models of distribution and growth discussed so far have been criticized by some Neo-Marxian and Neo-Ricardian authors (Auerbach/Skott 1988; Committeri 1986), because the equilibrium rate of capacity utilization in these models may deviate permanently from firms’ target rate of utilization, the long-run ‘normal rate’, without any tendency to adjustment.17 This deviation seems to be inconsistent with the requirement that firms’ investment decisions should be based on expectations of some ‘normal rate’ of utilization with regard to new productive equipment. Therefore, firms are supposed to adjust productive capacity to demand in the long run, and capacity utilization should be equal to firms’ target rate of utilization in a ‘fully adjusted long-run position’.

Suggested Citation

  • Eckhard Hein, 2008. "On the (In-)stability and the Endogeneity of the Normal Rate of Capacity Utilization in a Post-Keynesian/Kaleckian ‘Monetary’ Distribution and Growth Model," Palgrave Macmillan Books, in: Money, Distribution Conflict and Capital Accumulation, chapter 17, pages 153-167, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-59560-6_17
    DOI: 10.1057/9780230595606_17
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    Cited by:

    1. Mariolis, Theodore, 2007. "Distribution and Growth in an Economy with Heterogeneous Capital and Excess Capacity," MPRA Paper 24042, University Library of Munich, Germany.
    2. Eckhard Hein, 2016. "Secular stagnation or stagnation policy? Steindl after Summers," PSL Quarterly Review, Economia civile, vol. 69(276), pages 3-47.
    3. Hein, Eckhard, 2016. "The Bhaduri/Marglin post-Kaleckian model in the history of distribution and growth theories: An assessment by means of model closures," IPE Working Papers 66/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    5. Eckhard Hein, 2019. "Harrodian instability in Kaleckian models and Steindlian solutions," FMM Working Paper 46-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    Keywords

    Monetary Policy; Central Bank; Inflation Rate; Real Interest Rate; Capacity Utilization;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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