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Fiscal transfers and common debt in a Monetary Union: a multi-country agent–based stock flow consistent model
No full textInnovation and finance: an SFC analysis of great surges of development
No full textSchumpeter, a century ago, argued that boom-and-bust cycles are intrinsically related to the functioning of a capitalistic economy. These cycles, inherent to the rise of innovation, are an unavoidable consequence of the way in which markets evolve and assimilate successive technological revolutions. Furthermore, Schumpeter’s analysis stressed the fundamental role played by finance in fostering innovation, in defining bank credit as the “monetary complement” of innovation. Nevertheless, we feel that the connection between innovation and firm financing has seldom been examined from a theoretical standpoint, not only by economists in general, but even within the Neo-Schumpeterian research line. Our paper aims at analyzing both the long-term structural change process triggered by innovation and the related financial dynamics inside the coherent framework provided by the stock-flow consistent (SFC) approach. The model presents a multisectoral economy composed of consumption and capital goods industries, a banking sector, and two household sectors: capitalists and wage earners. The SFC approach helps us to track the flows of funds resulting from the rise of innovators in the system. The dynamics of prices, employment, and wealth distribution among the different sectors and social groups is analyzed. Above all, the essential role of finance in fostering innovation and its interaction with the real economy is underlined
The Effects of Alternative Wage Regimes in a Monetary Union: A Multi-Country Agent Based-Stock Flow Consistent Model
No full textThis paper aims at investigating the interplay between inequality, innovation dynamics, and investment behaviors in shaping the long-run patterns of growth of a closed economy. By extending the analysis proposed in Caiani et al. [(2018) Journal of Evolutionary Economics], we explore the effects of alternative wage regimes under different investment and technological change scenarios. Experimental results seem to de-emphasize the role of technological progress as a possible source of greater inequality. Overall, simulation results are consistent with the predominance of a wage-led growth regime in most of the scenarios analyzed: A faster growth of low- and middle-level workers' wages, relative to managers', generally exert beneficial effects on the economy and allows to counteract the labor-saving effects of technological progress. Furthermore, a distribution more favorable to workers does not compromise firms' profitability, but rather strengthen it by creating a more favorable macroeconomic environment, which encourages further innovations, stimulates investment, and sustains economic growth
ARE HIGHER WAGES GOOD FOR BUSINESS? AN ASSESSMENT UNDER ALTERNATIVE INNOVATION AND INVESTMENT SCENARIOS
Full text linkThis paper aims at investigating the interplay between inequality, innovation dynamics, and investment behaviors in shaping the long-run patterns of growth of a closed economy. By extending the analysis proposed in Caiani et al. [(2018) Journal of Evolutionary Economics], we explore the effects of alternative wage regimes under different investment and technological change scenarios. Experimental results seem to de-emphasize the role of technological progress as a possible source of greater inequality. Overall, simulation results are consistent with the predominance of a wage-led growth regime in most of the scenarios analyzed: A faster growth of low- and middle-level workers’ wages, relative to managers’, generally exert beneficial effects on the economy and allows to counteract the labor-saving effects of technological progress. Furthermore, a distribution more favorable to workers does not compromise firms’ profitability, but rather strengthen it by creating a more favorable macroeconomic environment, which encourages further innovations, stimulates investment, and sustains economic growth
Are Higher Wages Good for Business? An Assessment Under Alternative Innovation and Investment Scenarios
Full text linkThis paper aims at investigating the interplay between inequality, innovation dynamics, and investment behaviors in shaping the long-run patterns of growth of a closed economy. By extending the analysis proposed in Caiani et al. (2018) we explore the effects of alternative wage regimes under different investment and technological change scenarios. Experiments results seem to de-emphasize the role of technological progress as a possible source of greater inequality. Overall, simulation results are consistent with the predominance of a wage-led growth regime in most of the scenarios analyzed: a faster growth of low and middle level workers’ wages, relative to managers’, generally exert beneficial effects on the economy and allows to counteract the labor-saving effects of technological progress. Furthermore, contrary to what is sometimes argued in the academic and political debate, a distribution more favorable to workers does not compromise firms’ profitability, but rather strengthen it creating a more favorable macroeconomic environment which encourages further innovations, stimulates investment, and sustains economic growth
A stock flow consistent analysis of a Schumpeterian innovation economy
No full textSchumpeter argued that boom and bust cycles are inherent to the rise of innovation and constitute an unavoidable consequence of the way the capitalist system reacts to the emergence of a wave of innovations. This contribution aims to describe Schumpeterian economic development in a ‘monetary theory of production’ framework, emphasizing the crucial role played by credit creation, conceived as ‘the monetary complement’ of innovation. By adopting a stock flow consistent analytical approach, we analyze both the structural change process triggered in the real economy by the emergence of innovation, and the monetary dynamics arising during the various stages of the development process
The Effects of Fiscal Targets in a Monetary Union: a Multi-Country Agent Based-Stock Flow Consistent Model
No full textDoes inequality hamper innovation and growth? An AB-SFC analysis
No full textWe propose to analyze the relationship between inequality and economic development by means of an Agent Based-Stock Flow Consistent model where workers have been differentiated into four classes competing on segmented labor markets, and where firms’ demand for each type of worker is affected by their hierarchical organization. In order to account for the impact of income and wealth distribution on consumption patterns, worker classes have diversified average propensities to consume and save. Finally, firms in the capital sector invest in R&D, thus possibly coming to produce more productive vintages of machineries, which affect the evolution of labor productivity in the consumption sector. The model is calibrated using realistic values for the income and wealth distribution across different income groups and their average propensities to consume. Results of the simulation experiments suggest that more progressive tax schemes and measures that sustain the dynamics of wages of low and middle level workers concur to foster economic development and to reduce inequality. However, the latter seem to be more effective under both respects. Therefore, the model results are broadly in line with the literature suggesting the prevalence of wage-led growth regimes in closed economic systems. In the conclusions we discuss current limitations and future development of the present research
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