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A Note on Credit Allocation, Income Distribution and the Circuit of Capital
Author(s) -
Santos Paulo L.
Publication year - 2014
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12035
Subject(s) - economics , consumption (sociology) , profit (economics) , aggregate income , income distribution , distribution (mathematics) , production (economics) , revenue , effective demand , aggregate demand , wage , monetary economics , labour economics , microeconomics , macroeconomics , inequality , finance , monetary policy , mathematical analysis , social science , mathematics , sociology
This note considers the relationship between credit allocation and the class distribution of income in the C ircuit of C apital. Production and consumption credit inject means of purchase into different phases of capitalist reproduction. Comparative‐dynamic analysis of steady‐state evolutions shows that in the dynamic terms of C ircuit of C apital production and consumption credit respectively increase wage and profit shares of aggregate income. These findings hold more broadly for any setting where sectoral revenue elasticities of outlays are below unity. They also have direct policy relevance for advanced and middle‐income economies where household borrowing has been encouraged in attempts to support demand and growth.