We show that (i) dynamic inefficiency may be empirically relevant in a modified Diamond model with imperfect competition, (ii) if fiscal policy is used to avoid inefficiency and maintain an optimal capital intensity, the required debt ratio will be inversely related to the growth rate, and (iii)...

This paper provides evidence that austerity shocks have long-run negative effects on GDP. Besides addressing the important gap in the growing fiscal research regarding the short time horizon of the estimations, this paper analyzes two other important assumptions made in the literature regarding...

Rising inequality affects the composition of asset demands as well as aggregate demand. The poor have few financial assets and their portfolio is skewed towards fixed-income assets. The rich, by contrast, hold a large proportion of their wealth in stocks. Thus, an increase in inequality tends to...

In the last three decades, two questions have been central for the Left. Is there a future for electoral socialism and social democracy? And, is it any longer possible to promote a significant redistribution of income in favour of labour? Political and economic events seem to suggest negative...

US earnings inequality has increased dramatically since the 1970s, and the prospect of a reversal depends on what caused the trend. The standard explanation emphasizes skill-biased technical change. This paper briefly considers some aggregation issues and then proceeds to outline two alternative...

We consider the links between information and communications technologies (ICTs) and the distribution of income, as mediated by problems of coordination and control within organizations. In the large corporations of the mid-twentieth century, a highly developed division of labor was coordinated...

We explore the dynamics of group inequality when segregation of social networks places the initially less affluent group at a disadvantage in acquiring human capital. Extending Loury (1977), we demonstrate that (i) group differences in economic success can persist across generations in the...

The paper examines the determinants of income and wealth inequality in a Kaldorian model where the profit share adjusts to clear the goods market and the long-run output-capital ratio is constant. The approach is radically different from both the mainstream approach that stresses properties of...

The emphasis in post-Keynesian macroeconomics on wage- versus profit- led growth may not have been helpful. The profit share is not an exogenous variable, and the correlations between the pro.t share and economic growth can be positive for some exogenous shocks but negative for others. The...

This paper analyses the influence of norms of fairness on wage formation. Fairness is defined by "real-wage" and "relative-wage" norms that relate wage offers to workers' own current wage and to the wages of other groups of workers, and, to avoid shirking, firms pay fair wages. The wage norms...