Varieties and interdependencies of demand and growth regimes in finance-dominated capitalism: a Post-Keynesian two-country stock–flow consistent simulation approach
Franz Prante Berlin School of Economics and Law, Institute for International Political Economy (IPE) and Institute for Socio-Economics, University of Duisburg-Essen, Germany

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Eckhard Hein Berlin School of Economics and Law, Institute for International Political Economy (IPE), Germany

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Alessandro Bramucci Berlin School of Economics and Law, Institute for International Political Economy (IPE), Germany

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The authors outline and simulate a stylized Post-Keynesian two-country stock–flow consistent model to demonstrate the interconnection of three of the main features/outcomes of finance-dominated capitalism, namely worsening income distribution for the bottom 90 per cent of households, the rise of international imbalances, and the build-up of financial fragility. In the model, two basic regimes emerge, depending on the institutional setting of the respective model economy: the debt-led private demand boom regime and the export-led mercantilist regime. The authors demonstrate the complementarity and interdependence of these two regimes and show how this constellation transformed after a crisis into the domestic demand-led regime stabilized by government deficits, on the one hand, and export-led mercantilist regimes, on the other, depending on the required deleveraging of private household debt, distributional developments and fiscal policy.

Contributor Notes

Corresponding author: Franz Prante, University of Duisburg-Essen, Lotharstr. 65, 47057 Duisburg, Germany; email: franz.prante@uni-due.de.

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