This paper studies the effects of an (exogenous) increase of nominal wages on profits, output, and growth. Inspired by an article by Michał Kalecki (1991), who concentrated on the effects on total profits, the paper develops a model that explicitly considers the dynamics of demand, prices, profits, and investment. The outcomes of the initial wage rise are found to be path dependent and crucially affected by the firms’ initial response to an increase in demand and a decrease in profit margins. The present model, which relates to other Post Keynesian/Kaleckian contributions, can offer an alternative to the mainstream approach to analyzing the effects of wage increases.
Distribution and Growth: A Dynamic Kaleckian Approach / Patriarca, Fabrizio; Sardoni, Claudio. - ELETTRONICO. - Levy Economics Institute of Bard College Working Paper no. 697:(2011).
Distribution and Growth: A Dynamic Kaleckian Approach
PATRIARCA, Fabrizio;SARDONI, Claudio
2011
Abstract
This paper studies the effects of an (exogenous) increase of nominal wages on profits, output, and growth. Inspired by an article by Michał Kalecki (1991), who concentrated on the effects on total profits, the paper develops a model that explicitly considers the dynamics of demand, prices, profits, and investment. The outcomes of the initial wage rise are found to be path dependent and crucially affected by the firms’ initial response to an increase in demand and a decrease in profit margins. The present model, which relates to other Post Keynesian/Kaleckian contributions, can offer an alternative to the mainstream approach to analyzing the effects of wage increases.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
