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A Steindlian account of the distribution of corporate profits and leverage: A stock-flow consistent macroeconomic model with agent-based microfoundations

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  • Jo Michell

Abstract

Post Keynesian economics has largely forgotten Steindl's insight that monopolisation of the corporate sector redistributes profits to those firms least likely to invest them productively. Agent-based methods can be used to incorporate Steindl's insights into a simple stock- flow consistent model of the monetary circuit. This model illustrates the `maldistribution of profits' and `enforced indebtedness' of heterogeneous firms alongside the tendency towards stagnation that occurs with rising monopolisation. The model also demonstrates Minsky's assertion that firms' leverage rises over the business cycle can be reconciled with Kalecki's macroeconomic identities showing that profits are `financed' by the investment expenditures of firms.

Suggested Citation

  • Jo Michell, 2014. "A Steindlian account of the distribution of corporate profits and leverage: A stock-flow consistent macroeconomic model with agent-based microfoundations," Working Papers PKWP1412, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp1412
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    References listed on IDEAS

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    Cited by:

    1. Ítalo Pedrosa & Dany Lang, 2018. "Heterogeneity, distribution and financial fragility of non-financial firms: an agent-based stock-flow consistent (AB-SFC) model," Working Papers hal-01937186, HAL.
    2. Severin Reissl, 2021. "Heterogeneous expectations, forecasting behaviour and policy experiments in a hybrid Agent-based Stock-flow-consistent model," Journal of Evolutionary Economics, Springer, vol. 31(1), pages 251-299, January.
    3. Roberto Veneziani & Luca Zamparelli & Corrado Di Guilmi, 2017. "The Agent-Based Approach To Post Keynesian Macro-Modeling," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1183-1203, December.
    4. Maria Nikolaidi, 2017. "Three decades of modelling Minsky: what we have learned and the way forward," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 222-237, September.
    5. Ítalo Pedrosa & Dany Lang, 2018. "Heterogeneity, distribution and financial fragility of non-financial firms: an agent-based stock-flow consistent (AB-SFC) model," CEPN Working Papers hal-01937186, HAL.
    6. Reale, Jessica, 2024. "Interbank Decisions and Margins of Stability: an Agent-Based Stock-Flow Consistent Approach," Journal of Economic Dynamics and Control, Elsevier, vol. 160(C).
    7. Özgür Bayram SOYLU, 2020. "A simple model of developing countries: financing the current account deficit Abstract: A stock flow consistent model provides a monetary and financial framework to macroeconomics. It clearly shows th," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 123-145, June.
    8. Jessica Reale, 2023. "Interbank Decisions and Margins of Stability: an Agent-Based Stock-Flow Consistent Approach," Papers 2306.05860, arXiv.org.
    9. Ítalo Pedrosa & Dany Lang, 2021. "To what extent does aggregate leverage determine financial fragility? New insights from an agent-based stock-flow consistent model," Journal of Evolutionary Economics, Springer, vol. 31(4), pages 1221-1275, September.

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    More about this item

    Keywords

    Stock-flow consistent; heterogeneous agents; post-Keynesian;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E16 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Social Accounting Matrix
    • 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
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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