Growth, Distribution, Stability and Government Budget Surplus: The Extended Cambridge Equation Revisited

In the late 80’s Pasinetti showed that the essential feature of the Cambridge Equation is preserved in his model of growth and income distribution with balanced or unbalanced budget. He did not work out both the share of incomes and the conditions of stability and was not formally concerned with a permanent budget surplus. The present paper deals with the case of a closed economy in which, besides direct taxation, indirect taxation on government’s own expenditures is explicitly considered and the government saves permanently at a given rate. The extended Cambridge Equation and the share of profits are obtained. It is also shown that the stability result requires additional assumptions. Boundary conditions are introduced and the long-run local stability result is attained, thus corroborating the generality and robustness of Pasinetti’s original insight.Budget Surplus, Cambridge Equation, Growth, Distribution, Stability

Decisions on investment allocation in the post-Keynesian growth models

In this article the analysis developed by Feldman (1928) and Mahalanobis (1953) are incorporated to the Post-Keynesian Growth Model to consider the decisions of investment allocation on economic growth. By adopting this approach it is possible to study the interaction between distributive features and investment allocation which allows us to determine the rate of investment allocation according to the equilibrium decisions of investment and savings. Finally, an additional condition is added to the Post Keynesian Growth Model in order to fully characterise the equilibrium path in an extended version of this framework, where capital goods are also needed to produce capital goods.Post-Keynesian growth model, structural change, multi-sector models

A multi-sector version of the Post-Keynesian growth model

With this inquiry we seek to develop a disaggregated version of the post-Keynesian approach to economic growth, by showing that indeed it can be treated as a particular case of the Pasinettian model of structural change and economic expansion. By relying upon vertical integration it becomes possible to carry out the analysis initiated by Kaldor (1956) and Robinson (1956, 1962), and followed by Dutt (1984), Rowthorn (1982) and later Bhaduri and Marglin (1990) in a multi-sectoral model in which demand and productivity increase at different paces in each sector. By adopting this approach it is possible to show that the structural economic dynamics is conditioned not only to patterns of evolving demand and diffusion of technological progress but also to the distributive features of the economy, which can give rise to different regimes of economic growth. Besides, we find it possible to determine the natural rate of profit that makes the mark-up rate to be constant over time.Post-Keynesian growth model, structural change, multi-sector models

O modelo de von Neumann e a fascinação com a teoria do crescimento equilibrado

Este trabalho trata do modelo de crescimento de von Neumann e da fascinação exercida pelo mesmo entre economistas. São salientadas as características clássicas da abordagem para o problema de uma economia em expansão uniforme, assim como sua conexão com modernas teorias do crescimento. É também oferecida uma visão panorâmica do complexo processo de modelagem, incluindo seus objetivos e limitações

Decisions on investment allocation in the Post-Keynesian growth model

In this article the growth models of Feldman (1928) and Mahalanobis (1953) are extended to consider the analysis of decisions of investment allocation in the context of the Post-Keynesian Growth Model. By adopting this approach it is possible to introduce distributive features in the Feldman-Mahalanobis model that allows us to determine the rate of investment allocation according to the equilibrium decisions of investment and savings. Finally, an additional condition is added to the Post-Keynesian Growth Model in order to fully characterise the equilibrium path in an extended version of this framework, where capital goods are also needed to produce capital goods.Neste artigo os modelos de crescimento e alocação de investimento a la Feldman-Mahalanobis são estendidos para considerar a análise de decisões de alocação de investimento no contexto do modelo de crescimento Pós-Keynesiano. Ao adotar essa abordagem é possível introduzir características distributivas no modelo de Feldman Mahalanobis que nos permitem determinar a taxa de alocação de investimentos de acordo com as decisões de equilíbrio entre investimento e poupança. Finalmente, uma condição adicional é acrescida ao modelo de crescimento Pós-Keynesiano, a fim de caracterizar plenamente o caminho de equilíbrio em uma versão estendida deste, em que bens de capital também são necessários para produzir bens de capital

EQUILÍBRIO DISTRIBUTIVO EM MODELOS KALDORIANOS AMPLIADOS

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Fictitious capital and the elusive quest in understanding its implications : illusions and paradoxes

This paper deals with the interaction between fictitious capital and the neoliberal model of growth and distribution, inspired by the classical economic tradition. Our renewed interest in this literature has a close connection with the recent international crisis in the capitalist economy. However, this discussion takes as its point of departure the fact that standard economic theory teaches that financial capital, in this world of increasing globalization, leads to new investment opportunities which improve levels of growth, employment, income distribution, and equilibrium. Accordingly, it is said that such financial resources expand the welfare of people and countries worldwide. Here we examine some illusions and paradoxes of such a paradigm. We show some theoretical and empirical consequences of this vision, which are quite different and have harmful constraints

Fictitious capital and economic crisis: visions towards a new paradigm

Este artigo tem o propósito inicial de conceituar o que é capital fictício e questionar seu papel na narrativa econômica ortodoxa. Outro objetivo é demonstrar os efeitos prejudiciais deste capital no Brasil. O capital fictício é toda rentabilidade proveniente da valoração derivada e artificial de um capital aplicado, já sem atuação na produção. Sua presença massiva sinaliza uma contradição interna no capitalismo atual, ainda que o pensamento convencional continue a se basear na crença de que crises econômicas são decorrentes de eventos exógenos e inesperados. A crise provém não de eventos aleatórios ou ao acaso, mas da dissociação entre circulação e produção, o que possibilita seu surgimento. Deste modo, a primeira parte deste artigo analisa a teoria do valor e do capital fictício como expressa por Marx e a heterodoxia; a segunda parte busca elucidar suas principais implicações para o caso brasileiro, e questiona a fé irrevogável que a ortodoxia tem na narrativa de crises supostamente surgidas de modelos de equilíbrio. _________________________________________________________________________________ ABSTRACTThis article has the purpose on defining fictitious capital theoretically and questioning its role on economic orthodox narratives. Its secondary goal is to demonstrate the harmful effects of such capital in Brazil. Fictitious capital is all rental obtained for the artificial and derivative valuation of invested capital without correspondence to production. Its massive presence signals an internal contradiction on current capitalism, even though conventional thinking still believes that crisis comes from exogenous and unexpected events. Actually, crisis occurs not by random but, indeed, through the dissociation between the circulationand the production process, which allows its offspring. The first part of this paper analyses basic aspects of the value theo­ry and fictitious capital as expressed by Marx and the heterodoxy; the second part deals with the Brazilian case and questions the irrevocable 'Faith' that orthodoxy has on crises' narratives supposedly sprung from models of equilibrium

Macroeconomic Coordination and Inflation Targeting in a Two-Country Model

This paper deals with a macroeconomic coordination and its stabilization within a new Keynesian framework. The dynamic treatment of a twocountry model is made by simulation, using the linear quadratic algorithm. We compare the optimal monetary policy rule for three types of equilibria: macroeconomic coordination, Nash and Stackelberg, using parameters that reflect the relative size and degree of openness of the economies. Under the strict inflation target, we obtain higher output and inflation volatilities due to each economy's reaction to the other country's policy. The only exception is the case of optimal macroeconomic coordination rules. This dynamic model finds that macroeconomic coordination policy is better than non-coordination rules, supporting the traditional result found in static models.