Alberto-Gabino Martínez Hernández deposited The macroeconomic evolution of the USA, 1970 – 2010. A heterodox mathematical modelling approach with System Dynamics. in the group Literature and Economics on Humanities Commons 1 month, 3 weeks ago
These models are a representation of the macroeconomic evolution of the US economy from 1970 to 2010. The main variables addressed are economic growth, income distribution and private debt. The theoretical basis of the model relies on what Bhaduri labeled as the “Marx-Keynes-Kalecki” tradition that has four distinctive assumptions: 1) The price of this one-commidty model is determined by a mark-up over the production costs. 2) Aggregate demand determines (AD) the level of production (Y). 3) Investment (I) is the key variable within aggregate demand. 4) The level of aggregate supply (Yt) is equal to aggregate demand (ADt). There are other features of the model that are also worth to pinpoint. The baseline model has three sectors: workers, industrial capital and private banking. The first two sectors are clearly differentiated by the marginal propensities of their members to consume and their access to credit. Workers have a marginal propensity to consume that goes from 0.5 to 1.3. The propensity of consumption of this sector varies with respect to two macro-level “shaping structures” that determine this sector’s microeconomic behavior. Workers’ propensity to consume varies non-linearly regarding inflation, and it exhibits a positive and linear relationship with respect to the industrial capital’s share on total income. On the other hand, capitalists can save or become indebted depending on the saving-investment gap. Any investment decision over savings is always financed by the acquisition of private debt provided by private banks, and the excess of savings is used to pay the debt contracted by the capitalists. Whilst the activity of private banking is limited only to the granting of credit, the accumulation of private debt represents its source of profits. A subsidiary assumption that is maintained throughout this model is that it is a closed economy without government.