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Wage- and profit-led regimes under modern finance: an exploration

Bhaduri, Amit
; 
Raghavendra, Srinivas
Repository DOI
Publication Date
2017-07-01
Keywords
profit realization, securitization, commercial banking, investment banking, profit-led, wage-led, effective demand, financialization
Type
Article
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Citation
Bhaduri, Amit; Raghavendra, Srinivas (2017). Wage- and profit-led regimes under modern finance: an exploration. Review of Keynesian Economics 5 (3), 426-438
Abstract
This paper generalizes the principle of effective demand to incorporate banking and finance as two distinct sectors. The traditional commercial banking sector is regulated and the modern shadow banking sector is mostly an unregulated provider of financial services. Through a stylized model the interconnectedness between the two sectors is analysed. The analysis shows how an almost infinite supply-side capacity of finance is created and explores its relation to the level of aggregate demand in the real economy. The impact of finance on the real economy is explored in both profit-and wage-led regimes at different levels of interconnectedness between commercial and investment banking.
Funder
Publisher
Edward Elgar Publishing
Publisher DOI
10.4337/roke.2017.03.05
Rights
Attribution-NonCommercial-NoDerivs 3.0 Ireland
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Collections
Externally hosted open access publications with University of Galway authors (2)