A non-linear macrodynamics of capital accumulation, distribution and conflict inflation

Abstract

It is developed a post-keynesian model of capital accumulation, distribution and conflict inflation in which investment is non-linear in distribution: at low (high) levels of wage share, the effect of a higher profit share on investment is negative (positive). This specification seems to conform with the empirical evidence for the rise and fall of the Golden Age in most advanced economies. As it turns out, whether the economy follows a wage-led accumulation regime or a profit-led one depends on distribution. Given such non-linearity, it is developed a qualitative analysis of a possible configuration leading to multiple equilibria and endogenous, self-sustaining fluctuations. Hence, an innovative feature of the model is that it does not rely on full capacity utilization being reached for a change in the capital accumulation and growth regimes to take place.