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Income Distribution, Debt Accumulation, and Financial Fragility in a Kaleckian Model with Labor Supply Constraints

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  • Hiroaki Sasaki
  • Shinya Fujita

Abstract

This paper investigates the effect of changes in the retention ratio, profit share, interest rate, and natural rate of growth on the rate of capital accumulation and the financial structure of firms by using a Kaleckian growth model with labor supply constraints. We show that if the economy exhibits a debt-burdened regime, depending on certain conditions, there could be cyclical fluctuations such that the financial structure of firms changes periodically from speculative finance to Ponzi finance.

Suggested Citation

  • Hiroaki Sasaki & Shinya Fujita, 2012. "Income Distribution, Debt Accumulation, and Financial Fragility in a Kaleckian Model with Labor Supply Constraints," Discussion papers e-12-007, Graduate School of Economics Project Center, Kyoto University.
    • Handle: RePEc:kue:dpaper:e-12-007
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Financial structure; labor supply constraints; Kaleckian model; cyclical fluctuations;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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