Open Access. Powered by Scholars. Published by Universities.®
Social and Behavioral Sciences Commons™
Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 11 of 11
Full-Text Articles in Social and Behavioral Sciences
Financialization, Deindustrialization And Instability In Latin America, Esteban Pérez Caldentey, Matías Vernengo
Financialization, Deindustrialization And Instability In Latin America, Esteban Pérez Caldentey, Matías Vernengo
PERI Working Papers
The paper analyzes the relation between premature deindustrialization in Latin America with what is termed premature financialization. Premature financialization is defined as a turn to finance, organized as an industrial concern, which is a vehicle for accumulation before the process of industrialization has reached maturity. This contrasts with developed countries where financialization occurs after an advanced stage of economic and social development is reached, and where the growth of the financial sector, beyond a certain threshold, can be detrimental to economic activity. The paper examines the consequences of premature financialization for investment, growth, and financial stability.
Financialization And Militarization: An Empirical Investigation, Pelin Akçagün, Adem Yavuz Elveren
Financialization And Militarization: An Empirical Investigation, Pelin Akçagün, Adem Yavuz Elveren
PERI Working Papers
Based on Arrighi (1994), we empirically investigate whether financialization and militarization are mutually reinforcing phenomena in the US during the post-WW II period. Military spending during the 1950s and 1960s in the US, along with other external stimuli, such as a rising sales effort and expansion in finance, insurance, and real estate, counteracted the stagnation of the monopolistic stage of capitalism. Monopoly capital was transformed into finance monopoly capital as the intensity of financial capital increased during the late 1970s in response to stagnation. Considering alternative financialization variables commonly used in the literature and the profit rate in the financial …
Re-Making Of The Turkish Crisis, ÖZgüR Orhangazi, Erinç Yeldan
Re-Making Of The Turkish Crisis, ÖZgüR Orhangazi, Erinç Yeldan
PERI Working Papers
Turkey entered a new phase of recession-cum-real economy crisis starting in the last quarter of 2018. In contrast to the previous crisis episodes of 1994, 2001 or 2009, when the economy has abruptly shrunk with a spectacular collapse of asset values and a severe contraction of output, the 2018- crisis is characterized by a prolonged recession with persistent low (negative) rates of growth, dwindling investment performance, debt repayment problems, secularly rising open unemployment, a spiraling currency depreciation and high inflation. Popular explanations from the mainstream tradition attribute this dismal performance to a lack of “structural reforms” and/or exogenous factors. Per …
The Role Of Intangible Assets In Explaining The Investment-Profit Puzzle, Özgür Orhangazi
The Role Of Intangible Assets In Explaining The Investment-Profit Puzzle, Özgür Orhangazi
PERI Working Papers
Starting around the early 2000s, and especially after the 2008 crisis, the rate of capital accumulation for US nonfinancial corporations has slowed down despite relatively high profitability; indicating a weakening of the link between profitability and investment. While the literature mostly focuses on financialization and globalization as the reasons behind this slowdown, I suggest adding another layer to these explanations and argue that, in conjunction with financialization and globalization, we need to pay attention to the increased use of intangible assets by nonfinancial corporations in the last two decades. Intangibles such as brand names, trademarks, patents, and copyrights play a …
Top Income Shares And Aggregate Wealth-Income Ratio In A Two-Class Corporate Economy, Soon Ryoo
Top Income Shares And Aggregate Wealth-Income Ratio In A Two-Class Corporate Economy, Soon Ryoo
Economics Department Working Paper Series
This paper examines some determinants of top income shares and the aggregate wealth-income ratio in the United States. The paper, first, points out the difficulties in Piketty’s neo-classical version of explanation of US income inequality, which stresses the effect of the rising aggregate wealth-income ratio and high elasticity of factor substitution. Second, the analysis, based on a Cambridge two-class model along the lines of Kaldor (1955/56, 1966) and Pasinetti (1962), highlights the role of financialization in increasing inequality. Third, the analysis suggests that the rise in the aggregate wealth-income ratio from 1980 to 2007 in the US is explained mostly …
Inequality Of Income And Wealth In The Long Run: A Kaldorian Perspective, Soon Ryoo
Inequality Of Income And Wealth In The Long Run: A Kaldorian Perspective, Soon Ryoo
Economics Department Working Paper Series
The paper examines the determinants of income and wealth inequality in a Kaldorian model where the profit share adjusts to clear the goods market and the long-run output-capital ratio is constant. The approach is radically different from both the mainstream approach that stresses properties of production function and the Kaleckian approach that emphasizes the long-run adjustment of utilization. The Kaldorian model is used to identify several developments that may have caused increasing inequality in income and wealth since the early 1980s, including the shift of the power relation in corporate firms in favor of top managerial pay, the decline in …
The Correlates Of Rentier Returns In Oecd Countries, Arjun Jayadev, Gerald Epstein
The Correlates Of Rentier Returns In Oecd Countries, Arjun Jayadev, Gerald Epstein
PERI Working Papers
This paper examines the correlates of rentier returns – returns to the ownership of financial assets -- in a sample of OECD countries between 1960 and 2000. We develop a simple bargaining model among three classes – industrial capitalists, rentiers and workers – and show that rentier income returns increase when domestic and foreign real interest rates costs of capital mobility fall, and the power of labor declines. Using an unbalanced panel dataset, the paper also econometrically investigates the impacts of proxies for these variables on rentier incomes. We find that interest rate liberalization, the reduction in the unionization rate …
Some Stylized Facts On The Finance-Dominated Accumulation Regime, Engelbert Stockhammer
Some Stylized Facts On The Finance-Dominated Accumulation Regime, Engelbert Stockhammer
PERI Working Papers
While there is an agreement that the Fordist accumulation regime has come to an end in the course of the 1970s, there is no agreement on how to characterize the post-Fordist regime (or if a such is already in place). The paper seeks put together various arguments related to financialization (in the broad sense) from a macroeconomic point of view and investigate the relevance of these arguments by means of an analysis stylized facts for EU countries. The paper discusses changes in investment behaviour, consumption behaviour and government expenditures, investigating to what extent changes are related to financialization. Households experience …
Macroeconomic Implications Of Financialization, Peter Skott, Soon Ryoo
Macroeconomic Implications Of Financialization, Peter Skott, Soon Ryoo
Economics Department Working Paper Series
A growing literature suggests that ‘financialization’ may weaken the performance of non-financial corporations and constrain the growth of aggregate demand. This paper evaluates (some of) the claims that have been made using two alternative approaches (one derived from Skott (1981, 1988, 1989) and one from Lavoie and Godley (2001-2002)) and two different settings (a labor-constrained setting and a dual-economy setting). All models are in a structuralist / post Keynesian tradition and pay explicit attention to financial stock-flow relations. The results are insensitive to the precise specification of household saving behavior but depend critically on the labor market assumptions (labor-constrained vs. …
Financialization And Capital Accumulation In The Non-Financial Corporate Sector: A Theoretical And Empirical Investigation Of The U.S. Economy: 1973-2003, Özgür Orhangazi
Financialization And Capital Accumulation In The Non-Financial Corporate Sector: A Theoretical And Empirical Investigation Of The U.S. Economy: 1973-2003, Özgür Orhangazi
PERI Working Papers
Recent research has explored the growing ‘financialization’ process in the U.S. and other advanced economies. The term is a catch-all phrase used to denote important changes in the structure of non-financial corporations’ balance sheets, including the growth of income from financial subsidiaries and investment as well as growth in the transfer of earnings to financial markets in the forms of interest payments, dividend payments and stock buybacks. This paper seeks to empirically explore the relationship between financialization in the U.S economy and real investment at the firm level. Using data from a sample of non-financial corporations from 1973 to 2003, …
Financialization: What It Is And Why It Matters, Thomas I. Palley
Financialization: What It Is And Why It Matters, Thomas I. Palley
PERI Working Papers
Financialization is a process whereby financial markets, financial institutions and financial elites gain greater influence over economic policy and economic outcomes. Financialization transforms the functioning of economic system at both the macro and micro levels. Its principal impacts are to (1) elevate the significance of the financial sector relative to the real sector; (2) transfer income from the real sector to the financial sector; and (3) increase income inequality and contribute to wage stagnation. Additionally, there are reasons to believe that financialization may render the economy prone to risk of debt-deflation and prolonged recession. Financialization operates through three different conduits: …