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A Note on Credit Allocation, Income Distribution, and the Circuit of Capital

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  • Paulo L dos Santos

    (Department of Economics, SOAS University of London, UK)

Abstract

This note considers the relationship between credit allocation and the aggregate, class distribution of income in the Circuit of Capital. Production and consumption credit inject means of purchase in different locations in the monetary circuits of capitalist reproduction. On the basis of comparative-dynamic analysis of the properties of steady-state evolutions, the note shows that production credit increases the wage share in total income, while consumption credit increases profit shares. These findings hold in general for any evolution in which sectoral revenue-elasticities of outlays measure less than unity. The note also motivates a new endogenous approach to the aggregate distribution of income, and offers new analytical tools facilitating work based on demand-constrained models of the Circuit of Capital.

Suggested Citation

  • Paulo L dos Santos, 2013. "A Note on Credit Allocation, Income Distribution, and the Circuit of Capital," Working Papers 181, Department of Economics, SOAS University of London, UK.
    • Handle: RePEc:soa:wpaper:181
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    File URL: https://www.soas.ac.uk/sites/default/files/2022-10/economics-wp181.pdf
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    References listed on IDEAS

    as
    1. Foley, Duncan K., 1982. "Realization and accumulation in a Marxian model of the circuit of capital," Journal of Economic Theory, Elsevier, vol. 28(2), pages 300-319, December.
    2. Matteo Iacoviello, 2008. "Household Debt and Income Inequality, 1963–2003," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(5), pages 929-965, August.
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    Cited by:

    1. Paulo dos Santos, 2013. "Demand, Production, and the Determinants of Distribution: A Caveat on “Wage-Led Growth”," Working Papers wp323, Political Economy Research Institute, University of Massachusetts at Amherst.

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    Keywords

    Credit and Income Distribution; Circuit of Capital; Marxian Analyses;
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