Interest Rates, Income Shares, and Investment in a Kaleckian Model

Neither the older post-Keynesian models of growth and distribution (Kaldor, J. Robinson) nor the models based on the work by Kalecki and Steindl take sufficiently account of monetary va¬riables. Starting from a non-monetary Kaleckian effective demand model by Bhaduri & Marglin in which investment is determined by costs and capacity utilisation and in which equilibrium capacity utilisation may be below normal, this paper deals with the effects of an exogenous variation in the monetary interest rate on the real equilibrium position of the economic system. Different regimes of accumulation are derived and it is shown that a negative relation between the interest rate and the rates of capa¬city utilisation, accumulation and profit usually expected in post-Keynesian theory only exists under special conditions.