Quotation Ederer, Stefan, Rehm, Miriam. 2018. Making sense of Piketty's "fundamental laws" in a Post-Keynesian framework.


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Abstract

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 confirms to Piketty's empirical findings in a transitional phase, in which the wealth share of capitalists rises to over 60%, the wealth-toincome 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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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Making sense of Piketty's "fundamental laws" in a Post-Keynesian framework.
Year 2018
URL http://epub.wu.ac.at/6502/
JEL C63, D31, E12, E21

Associations

People
Ederer, Stefan (Details)
Rehm, Miriam (Former researcher)
Organization
Economics of Inequality FI (Details)
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