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A Minskyan critique of the financial constraint approach to financialization

Ilhan Dögüs

Keywords: financialization; financial constraint; Minsky; capital assets; financial assets

In this paper, the post-Kaleckian approach to financialization, which argues that investment of non-financial corporations (NFCs) in real capital assets has been constrained by rising dividend and interest payments, will be criticized based on a Minskyan understanding of investment. It will be suggested that reinvestment of profits in capital assets has decreased because of a decline in quasi-rent expectations induced by depressed demand. The argument will be tested via Granger causality using available US data for the period between 1960 and 2014.

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