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on Post Keynesian Economics |
| By: | Mark Setterfield (Department of Economics, New School for Social Research, USA) |
| Abstract: | Inspired by feminist macroeconomics, this paper shows how a Marx-Keynes-Schumpeter (MKS) macrodynamic system can be augmented by simple models of the care economy. To this end, an MKS model of steady-state growth and distribution is extended to include: first, a model of unpaid domestic care-giving within the household; and second, a model of household acquisition of marketed care services. It is shown that the care economy affects basic macroeconomic outcomes, such as labour productivity, aggregate demand formation, and the steady-state growth rate. The chief conclusion is that the care economy should be the subject of more routine attention in macroeconomic theory. |
| Keywords: | Care economy, human capacities, wage-led growth, profit-led growth, natural rate of growth |
| JEL: | B54 E11 E12 J16 J24 O33 O41 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2603 |
| By: | boughabi, houssam |
| Abstract: | This paper investigates the interplay between distributive conflict, wage dynamics, and persistent unemployment within a Kaleckian framework, emphasizing the long-memory properties of wages. We develop a stochastic model in which wages adjust adaptively to cumulative historical discrepancies between prices and wages, reflecting backward-looking expectations, institutional rigidities, and distributive conflict. Applying this framework to Germany over the period 1990–2024, we provide empirical evidence that persistent price–wage divergences generate long-lasting effects on real wages and aggregate demand. Within a Kaleckian perspective in which investment and employment are demand-driven, these wage dynamics contribute to the persistence of unemployment by weakening consumption and effective demand over time. Our findings highlight that long-memory wage adjustment amplifies the macroeconomic consequences of distributive conflict and inflation, underscoring the importance of historical wage inertia in shaping employment outcomes. The results offer new insights into the structural origins of persistent unemployment in advanced economies. |
| Keywords: | Kaleckian economics, wage–price dynamics, long-memory, distributive conflict, persistent unemployment |
| JEL: | C22 E12 E24 E32 J30 |
| Date: | 2026–01–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127752 |
| By: | Meijers, Huub (RS: GSBE MORSE, RS: GSBE other - not theme-related research, Macro, International & Labour Economics, Mt Economic Research Inst on Innov/Techn); Muysken, Joan (RS: GSBE other - not theme-related research, Macro, International & Labour Economics, RS: GSBE - MACIMIDE) |
| Abstract: | Investment has been low in the last decades (both by firms and by government). This does not only hold for fixed capital including R&D, but also for investment in climate, housing, infrastructure and education. Productivity has been low too and should be stimulated, as is elaborated in the Draghi report. A problem is that firms invest a considerable part of their savings in financial assets abroad. Moreover, assets held by banks and pension funds are mainly invested in mortgages and financial assets abroad. In this paper we analyse scenarios were banks, pension funds, and firms redirect part of their financial investments to investment in fixed capital and government investment. Next to demand effects this output growth is induced by productivity growth, in which productive government investment also plays a role. Finally, inflationary tendencies are controlled by wage and price policies. We elaborate these points for the Dutch economy. This economy is characterised by several stylised facts which constitute a highly interdependent framework: (1) households with positive savings, large pension claims and a huge mortgage debt; (2) firms with large positive savings and large financial claims abroad; (3) a large financial sector with assets mainly invested in mortgages and abroad; (4) a large trade balance surplus; (5) a Central Bank owning a large stock of Dutch government bonds; (6) a government with modest negative savings and a moderate debt; and (7) a centralised system of wage negotiations. In the paper we use an open economy post-Keynesian stock-flow consistent model with a welldeveloped financial sector. Next to the banking sector we distinguish a pension fund which invests to a large extent abroad. Firms invest a considerable part of their retained earnings abroad in financial assets. We also introduce an inflationary process, based on conflict inflation, which allows for external inflation shocks. The model recognises the balance sheets and portfolios of financial assets of the six sectors in the model – the prices of these assets are explicitly modelled. The financial flows leading to wealth changes are analysed and both wealth effects and transmission channels for the impact of monetary policy play an important role. Finally, productivity growth is affected by both private and government investment in a variant of Verdoorn’s Law. We estimate the model, using quarterly stock-flow consistent data for the Dutch economy. This enables us to reproduce the stylised facts presented above. From simulations with our model, we show the positive effects of redirecting investment to stimulate the economy. We also find a rebound effect if these redirected investments are discontinued. |
| Keywords: | Financialisation, investment, stock-flow consistent modelling, productivity |
| JEL: | E12 E37 E44 E64 O16 O23 O40 |
| Date: | 2026–02–24 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2026003 |
| By: | Fabio Petri |
| Abstract: | This paper attempts a pedagogical explanation of what the debates in capital theory around Sraffa’s results are about, and why they have profound implications for the theory of income distribution. First it is pointed out that the classical or surplus approach does not suffer from the inconsistencies it was accused of. Then the difference is stressed between traditional neoclassical theory which attempted the determination of long-period general equilibria, and the neo-Walrasian versions. A simple model illustrates the need for a given endowment of value capital for the determination of long-period equilibria; the impossibility of specifying this endowment is pointed out; the abandonment of that treatment of capital in the neo-Walrasian versions is shown to render those versions incapable of indicating the behaviour of actual economies Jel Classification: B21 B51 D50 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:usi:wpaper:939 |
| By: | boughabi, houssam |
| Abstract: | This paper develops and empirically evaluates a Kaleckian model of distributive conflict in which mark-up pricing generates a divergence between wages and prices, eroding workers’ real purchasing power and inducing debt-financed consumption. In contrast to neoclassical frameworks, prices are administratively set by firms under imperfect competition, while workers adjust to distributive losses through borrowing and the accumulation of bank deposits. The model for- malizes workers’ consumption behavior as a real, dynamic process, highlighting a martingale-like condition in which households smooth real consumption over time despite inflationary pressures arising from rising mark-ups. Using household-level panel data, the paper tests this martingale property by estimating a fixed-effects regression of real consumption on its lagged value and lagged financial resources. The results provide evidence that real consumption exhibits strong persistence, consistent with consumption smoothing, while debt plays a compensatory role in sustaining demand under declining wage shares, the analysis also shows that this mechanism is inherently unstable, as rising indebtedness eventu- ally leads to deleveraging, contraction in effective demand, and downward pressure on prices. The findings contribute to the Post-Keynesian literature by linking distributive conflict, household debt, offering new empirical insights into the dynamics of consumption and macroeconomic instability. |
| Keywords: | Kaleckian pricing; Distributive conflict; Debt-financed consumption; Consumption smoothing; Financial fragility. |
| JEL: | D33 E12 E25 E31 E44 |
| Date: | 2026–02–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127985 |
| By: | Dan Adler |
| Abstract: | Complex change is often described as "evolutionary" in economics, policy, and technology, yet most system dynamics models remain constrained to fixed state spaces and equilibrium-seeking behavior. This paper argues that evolutionary dynamics should be treated as a core system-thinking problem rather than as a biological metaphor. We introduce Stability-Driven Assembly (SDA) as a minimal, non-equilibrium framework in which stochastic interactions combined with differential persistence generate endogenous selection without genes, replication, or predefined fitness functions. In SDA, longer-lived patterns accumulate in the population, biasing future interactions and creating feedback between population composition and system dynamics. This feedback yields fitness-proportional sampling as an emergent property, realizing a natural genetic algorithm driven solely by stability. Using SDA, we demonstrate why equilibrium-constrained models, even when simulated numerically, cannot exhibit open-ended evolution: evolutionary systems require population-dependent, non-stationary dynamics in which structure and dynamics co-evolve. We conclude by discussing implications for system dynamics, economics, and policy modeling, and outline how agent-based and AI-enabled approaches may support evolutionary models capable of sustained novelty and structural emergence. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.15957 |