POST-KEYNESIAN EFFECTIVE DEMAND AND CAPITAL–LABOUR SUBSTITUTION

Authors

  • Takashi Ohno

    Corresponding author
    1. Ritsumeikan University
    Search for more papers by this author
    • * 

      The author would like to thank Takeshi Nakatani, Hideyuki Adachi, Taiji Hagiwara, Tamotsu Nakamura, Peter Skott, Ivohasina F. Razafimahefa, participants at meetings at Musashi University and Kobe University, and two anonymous referees and editors for their helpful comments and discussion. Of course, all remaining errors are my own.


Takashi Ohno
Ritsumeikan University
56-1 Tohji-in Kitamachi
Kita-ku Kyoto
Japan
E-mail: tohno@ec.ritsumei.ac.jp

ABSTRACT

This paper analyses the relationship between the real wage rate and employment when we induce capital–labour substitution within a Post-Keynesian Kaleckian model. To avoid the over-determinacy problem, we consider a non-homogeneous production function and cost minimization, in contrast to recent work that assumed a homogeneous production function and profit maximization. As a result, we find not only that increasing returns to scale are important in sustaining the long-run stability condition, but also that if the increasing returns to scale are small, then it is more likely that employment will increase.

Ancillary