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Economic Growth In Dual And Mature Economies: Revisiting The Pasinetti And Neo-Pasinetti Theorems, Peter Skott
Economic Growth In Dual And Mature Economies: Revisiting The Pasinetti And Neo-Pasinetti Theorems, Peter Skott
Economics Department Working Paper Series
This paper (i) examines the role of income distribution in the determination of the average saving rate and the growth process in dual and mature economies, and (ii) revisits the Pasinetti and neo-Pasinetti theo- rems. The profit share may influence saving because of differences in the saving rates across households (the Pasinetti theorem) or because firms retain part of their earnings (the neo-Pasinetti theorem). The two mechanisms are not mutually exclusive, and the alignment between warranted and natural growth rates in mature economies can happen through feed- back e¤ects from employment to the distribution of income.
Growth Cycles In Mature And Dual Economies, Peter Skott
Growth Cycles In Mature And Dual Economies, Peter Skott
Economics Department Working Paper Series
Mature economies may experience fluctuations, but the average medium and long run growth rate matches the natural rate. Like Kaldor's neo- Keynesian models, the Marx-Goodwin tradition explains this outcome by endogenizing the distribution of income and assuming that the accumulation of capital is increasing as a function of the profit share. The application of Goodwin cycles to developing economies may be hard to justify, however. The modified Goodwin models in this paper include relative-wage norms as a central element of wage formation. Norms change endogenously, leading to path dependence (hysteresis) in the stationary solution for the employment share of the …