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A two‐sector neo‐Kaleckian model of growth and distribution: Investment allocation and evolutionary dynamics
Author(s) -
Azevedo Araujo Ricardo,
Drumond Carlos Eduardo
Publication year - 2021
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.12317
Subject(s) - economics , investment function , profit (economics) , investment (military) , microeconomics , growth model , sector model , capital accumulation , evolutionary dynamics , distribution (mathematics) , capital (architecture) , ecology , mathematics , history , agriculture , population , mathematical analysis , demography , archaeology , production (economics) , sociology , politics , political science , law , biology
This paper focuses on the two‐sector neo‐Kaleckian model of growth and distribution that was developed by Dutt (1990) and challenged by Park (1995). We develop a variant of this model, focusing on the supply‐side to solve the overdetermination problem that was raised by Park. Finally, we introduce evolutionary dynamics to model the investment flows between the capital and consumer goods sectors. In this setup, the sectoral profit rates and the size of capital stocks wield an essential role upon the entrepreneur’s decision on which sector to invest in. This model is perfectly determined and it generates a stable evolutionary equilibrium over the long term.