Income Distribution, Asset Prices, and Aggregate Demand Formation, 1850-2010: A Post-Keynesian Approach to Historical Macroeconomic Data

This research project uses macroeconomic data going back to the mid-19th century to analyze issues such as the relation between income distribution and economic growth; and how debt, asset prices, and growth moved together the last 160 years.

Macroeconomic debates typically employ very recent, readily available time series. This is also true for heterodox macroeconomics. However, for key macroeconomic variables, much longer time series have been compiled. While there are various issues of data reliability and consistency, a gain in time dimension potentially outweighs the loss of precision in data. This research project is based on a post-Keynesian approach, based on Kalecki and Minsky (and financialisation debate), and employs data from the mid-19th century to the early 21st century. At the core of the model is the distinction between wage and profit-led demand regimes and between debt-led and debt-burdend demand regimes. The research contributes to debates in contemporary PK economics and in economic history. First, the project investigates the effect of changes in functional income distribution on aggregate demand. Second, we analyse the role of asset prices in economic growth, given our Kalecki and Minsky inspired approach. Third, we investigate the role of domestic demand and export-driven growth for the Scandinavian countries, both in the industrialisation period and in the 20th century. Fourth, we analyse to what extent key parameters have changed over time, whether the growth regimes have changed over time, and whether growth models can neatly be groups under headings like classical liberalism, Fordism, and neoliberalism.