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Inventories, Debt Financing and Investment Decisions: A Bayesian Analysis for the US Economy

Author

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  • Ettore Gallo

    (Department of Economics, New School for Social Research)

  • Gustavo Pereira Serra

    (Department of Economics, New School for Social Research)

Abstract

The recent debate in Post-Keynesian theories of investment has mainly focused on the endogenous nature of the degree of capacity utilization, overlooking Steindl’s and Minsky’s insights on the role of inventories and debt financing in shaping investment decisions. In order to fill this gap, this paper develops a Steindl-Minsky SFC model by including inventories, as well as firm’s deposits and debt financing into the investment function. The role of investment decisions in shaping economic growth is assessed by considering a model populated by five types of economic actors: workers, firms, rentiers, commercial banks and the central bank. First, business cycle fluctuations are investigated assuming a deterministic steady growth path in the long period, in line with recent developments in heterodox growth theory. Second, we simulate the model, calibrating it for the US economy.

Suggested Citation

  • Ettore Gallo & Gustavo Pereira Serra, 2020. "Inventories, Debt Financing and Investment Decisions: A Bayesian Analysis for the US Economy," Working Papers 2005, New School for Social Research, Department of Economics.
    • Handle: RePEc:new:wpaper:2005
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    File URL: http://www.economicpolicyresearch.org/econ/2020/NSSR_WP_052020.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gustavo Pereira Serra, 2021. "The First Harrod Problem and Human Capital Formation," Working Papers 2113, New School for Social Research, Department of Economics.

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