Journal Article
No. 2015-6 | February 06, 2015
Conflict in the Profit-Led Growth Model

Abstract

We model the interaction between capitalists and entrepreneurs as a dynamic game. The open-loop Nash equilibrium and the closed-loop Nash equilibrium are distinguished. The purpose is to answer some questions that have arisen in the development of profit-led versus wage-led growth models. We find that the rate of profit and the discount rate as well as the responsiveness of the wage rate or aggregate consumption to the accumulation of capital are critical to explaining the change in regimes.

JEL Classification:

B51, C73

Assessment

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Links

Cite As

Romar Correa (2015). Conflict in the Profit-Led Growth Model. Economics: The Open-Access, Open-Assessment E-Journal, 9 (2015-6): 1–9. http://dx.doi.org/10.5018/economics-ejournal.ja.2015-6


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