A Synthetic, Stock-Flow Consistent Macroeconomic Model of ‘Financialisation’

Posted: 6 May 2009

See all articles by Till van Treeck

Till van Treeck

Hans-Boeckler-Stiftung - Macroeconomic Policy Institute (IMK)

Date Written: May 2009

Abstract

This article is centred around the notions of shareholder value orientation and financialisation. Shareholder value orientation is reflected by a high dividend payout ratio applied by firms and the reluctance of firms to finance physical investment via new equity issues. Financialisation is the more general development towards an increased importance of the financial sector of the economy relative to the non-financial sector. In this article, a synthetic, stock-flow consistent model is developed that attempts to encompass some important recent works on the effects of financialisation. This includes contributions from the fields of mainstream information economics and post-Keynesian economics. We conduct simulations reflecting increased shareholder value orientation, and show that the results are consistent with important stylised facts.

Keywords: Stocks and flows, Investment finance, Payout policy, Wealth and consumption, Income distribution

JEL Classification: E21, E22, E25, G32, G35

Suggested Citation

van Treeck, Till, A Synthetic, Stock-Flow Consistent Macroeconomic Model of ‘Financialisation’ (May 2009). Cambridge Journal of Economics, Vol. 33, Issue 3, pp. 467-493, 2009, Available at SSRN: https://ssrn.com/abstract=1397449 or http://dx.doi.org/10.1093/cje/ben039

Till Van Treeck (Contact Author)

Hans-Boeckler-Stiftung - Macroeconomic Policy Institute (IMK) ( email )

Hans-Böckler-Straße 39
40476 Düsseldorf
Germany

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