Abstract
The aim of the paper is to understand the limits of an exhilarationist regime from a theoretical point of view. We propose a model where distributive shares are endogenously determined by assuming labor productivity to vary with the level of output/capacity utilization due to economies of scale. With an additional assumption of investment being determined by profit share we have a self-reinforcing interaction between the level of output and distribution of income in this model. Is there a limit to such a cumulative process? Here we analyze this question without relying on exogenous mechanisms such as ``ceiling/floor'' concepts.
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Raghavendra, S. Limits to Investment Exhilarationism. J Econ 87, 257–280 (2006). https://doi.org/10.1007/s00712-005-0171-5
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DOI: https://doi.org/10.1007/s00712-005-0171-5