Distribution and Growth after Keynes

Distribution and Growth after Keynes

A Post-Keynesian Guide

Eckhard Hein

In the first part of the book, Eckhard Hein presents a comprehensive overview of the main approaches towards distribution and growth including the contributions of Harrod and Domar, old and new neoclassical theories including the fundamental capital controversy critique, the post-Keynesian contributions of Kaldor, Pasinetti, Thirlwall and Robinson, and finally the approaches by Kalecki and Steindl. In the second part of the book neo- and post-Kaleckian models are gradually developed, introducing saving from wages, international trade, technological progress, interest and credit. Issues of ‘financialisation’ are also explored and empirical results related to the different models are presented.

Chapter 7: Extending Kaleckian models I: saving out of wages and open economy issues

Eckhard Hein

Subjects: economics and finance, history of economic thought, post-keynesian economics


In this chapter we will extend the different versions of the basic Kaleckian models presented in Chapter 6. The final purpose is to assess the empirical work which has been done on the basis of the Bhaduri and Marglin (1990) or post-Kaleckian model–a model which already in its most simple version is able to generate different potential regimes of demand and accumulation. We will start in Section 7.2 by introducing saving out of wages into the closed economy versions of the Rowthorn (1981) and Dutt (1984, 1987) neo-Kaleckian and the Bhaduri and Marglin (1990) and Kurz (1990) post-Kaleckian models outlined in Chapter 6. Then we will further extend the post-Kaleckian model by means of introducing international trade in Section 7.3. This will provide us with the version of the theoretical model which has been used in empirical research on wage-and profit-led demand and growth regimes since the early or mid-1990s, starting with the works of Marglin and Bhaduri (1990, 1991) and Bowles and Boyer (1995). The main results of this research will be reviewed in Section 7.4, and Section 7.5 will summarize and conclude this chapter.

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