What is neo Kaleckian model?
This paper develops a neo-Kaleckian dynamical model that investigates how an increased financial instability affects the investment rate and the wage share of income in the long run. It is shown that a rising benchmark interest rate affects negatively the capital accumulation and the wage share of income.
On what basis Kaleki explain theory of distribution?
Kalecki’s Theory of Distribution He believed that the relative share of profits and wages in the national outputs depends on the degree of monopoly in the economy. According to Kalecki, the marginal cost includes the cost of raw material and the cost of labor ( only wages ). Also, in the short run, MC = AC.
What is the Ricardian theory of distribution?
David Ricardo, in On the Principles of Political Economy and Taxation (1817), held that the landlords would receive an increasing part of the national income while capitalists would get less and less and that this shift in distribution would lead to economic stagnation.
Who gave the theory of income distribution?
Kalecki (1954 [1991]:209) posited: “Generally speaking, changes in the prices of finished goods are ‘cost-determined’, while changes in the prices of raw materials inclusive of primary foodstuffs are ‘demand-determined’”. With his theory of income distribution, Kalecki further developed his theory of effective demand.
What is modern theory of distribution?
Modern Theory of Distribution: Demand and Supply Theory (With Diagram) Just as the price of a commodity is determined by the demand for, and supply of, a commodity, similarly the price of a productive service also is determined by demand for, and supply of, that particular factor.
How is the relative share of wages and profit in the national income determined?
The share of wages in this case is uniquely determined by the demand conditions. (3) Whenever oligopoly and/or price leadership are significant the profit curve of Fig. 1 will become discontinuous. This will imply that over certain ranges the supply curve will be vertical, i.e. will exhibit a kink.
What is the contribution of David Ricardo?
David Ricardo (1772–1823) was a classical economist best known for his theory on wages and profit, the labor theory of value, the theory of comparative advantage, and the theory of rents. David Ricardo and several other economists also simultaneously and independently discovered the law of diminishing marginal returns.
Is the assumption of the modern theory of distribution?
The modern theory of factor pricing provides a satisfactory explanation of the problem of distribution. It is known as the demand and supply theory of distribution. According to the modem theory of factor pricing, the equilibrium factor prices can be explained by the forces of demand and supply.
What is modern theory of production?
theory of production, in economics, an effort to explain the principles by which a business firm decides how much of each commodity that it sells (its “outputs” or “products”) it will produce, and how much of each kind of labour, raw material, fixed capital good, etc., that it employs (its “inputs” or “factors of …
Which of the most important theory for the explanation of distribution?
Marginal productivity theory of distribution is the most celebrated theory of distribution. It is the neo-classical theory of distribution and is derived from Ricardo’s “Marginal principle”.
What is Kalecki’s theory of distribution?
Kalecki’s theory of distribution. The r-w ratio can change because of changes in investment, technical progress and wage bargains. In this section we will set out a Kaleckian model and evaluate the inf luence of these factors separately. 67. We assume that the economy divides into a manufacturing and a raw material producing
Is the critical appraisal of Kalecki’s theory lopsided?
Our analysis reveals that the critical appraisal of Kalecki’s theory has been lopsided. Most of the r-w ratio in to the analysis of distribution. Its significance for distribution and economic theory
What is Kalecki’s model of pricing?
In 1954, Kalecki (1971, pp.43-61) develops a new model of pricing which allows for price interdependence in an industry. He reasons as follows. Every firm would choose a mark-up
Did Kalecki gloss over R-W ratio in his distribution theory?
Kalecki pays more attention to the degree of monopoly in his distribution theory. We highlight the importance of the Raw Material-Wage Cost (r-w) ratio. Kalecki, no doubt, was aware of the role of r-w ratio, but for some reason he glossed over it.