Making sense of Piketty’s ‘fundamental laws’ in a Post-Keynesian framework
"Piketty’s main theoretical prediction is that a small elite will own all wealth if capitalism is left to its own devices. We formulate and calibrate a Post-Keynesian model with an endogenous distribution of wealth between workers and capitalists. The model permits Piketty’s corner solution of...
| Main Authors: | , |
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| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Leeds
2018
PKES |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19304958124911221309-Making-sense-of-Piketty’s-‘fun.htm |
| Summary: | "Piketty’s main theoretical prediction is that a small elite will own all wealth if capitalism is left to its own devices. We formulate and calibrate a Post-Keynesian model with an endogenous distribution of wealth between workers and capitalists. The model permits Piketty’s corner solution of all wealth held by capitalists; however, it also shows that interior solutions with a stable, non-zero wealth share of workers, a stable wealth-to-income ratio, and a stable and positive gap between the profit and the growth rate determined by the Cambridge equation. Furthermore, simulations show that the model conforms to Piketty’s empirical findings in a transitional phase, in which the wealth share of capitalists rises to over 60%, the wealth-to-income ratio increases, and income inequality rises. Finally, we show that the introduction of a wealth tax as suggested by Piketty could neutralize the rise in wealth concentration." |
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| Physical Description: | 24 p. Digital |