Distributional dynamics in Post Keynesian growth models

Abstract

This paper uses a set of simple Post Keynesian models of growth and distribution to provide a systematic analysis of how growth affects income distribution through a number of alternative channels, thereby making possible a more complete analysis of the interaction between growth and distribution than is possible in simpler models that concentrate on the effect of distributional changes on growth. It draws on Kalecki's discussion of the determinants of changes in the degree of monopoly analyzing, in turn, the influences of capacity utilization, industry characteristics, the importance of overhead costs, and the power of trade unions. It shows that a rich variety of dynamic outcomes can follow from the analysis of growth-distribution interactions and points to the importance of distinguishing between short-term and more long-term dynamics.

Keywords:

• aggregate demand
• bargaining power of workers
• degree of monopoly
• economic growth
• income distribution
• Post Keynesian models