Varieties and interdependencies of demand and growth regimes in finance-dominated capitalism
May 20, 2022
Our paper on Varieties and interdependencies of demand and growth regimes in finance-dominated capitalism has been published in the Review of Keynesian Economics. This is joint work with Alessandro Bramucci and Eckhard Hein.
In the paper, we 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. We 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.
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