The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective

Pasquale Lucio Scandizzo; Maria Rita Pierleoni

doi:doi:10.11648/j.eco.20180702.12

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The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective

Pasquale Lucio Scandizzo, Maria Rita Pierleoni

Published in Economics (Volume 7, Issue 2)

Received: 29 August 2018 Accepted: 20 September 2018 Published: 13 October 2018

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Abstract

This paper considers the problem of the determinants of income distribution in the light of the recent hypotheses advanced by Piketty on the evolution of the capitalistic system. It first reinterprets Piketty’s analysis in the context of a modified Cambridge model, where functional income distribution can adjust to ensure equality between a warranted rate and a natural rate of growth. The paper shows that this model yields some of the effects depicted by Piketty’s analysis through the rate of return to capital and the exogenous growth rate, if not only the functional, but also the personal distribution of income reacts to equilibrate the economy in response to divergent growth in the goods and labor markets. These results imply that the capital share of income and the share of the richer part of the population tend to move in the opposite direction in response to growth, so that, especially under declining growth, the fiscal treatment of capital and wealth should be different, with lower taxation for productive capital and increasing progressivity for income taxes. The main results of theoretical analysis are tested on data for the last 40 years of performance of the Italian economy, finding some significant consistency between the hypotheses formulated on the basis of the theoretical considerations above and the empirical evidence.

Published in	Economics (Volume 7, Issue 2)
DOI	10.11648/j.eco.20180702.12
Page(s)	34-46
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Post-Keynesian, Functional, Personal, Income Distribution, Growth

References

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[12]	Pasinetti, L.L. (1962). Income Distribution and rate of Profit in Relation to the Rate of Economic Growth. Reviews of Economic Studies. Vol. 29, pp 267-279.
[13]	Guiso, L., Jappelli T. and Terlizzese D. (1996). Income Risk, Borrowing Constraints, and Portfolio Choice. American Economic Review, American Economic Association. Vol. 86, No. 1, pp 158-72.
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Pasquale Lucio Scandizzo, Maria Rita Pierleoni. (2018). The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective. Economics, 7(2), 34-46. https://doi.org/10.11648/j.eco.20180702.12

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Pasquale Lucio Scandizzo; Maria Rita Pierleoni. The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective. Economics. 2018, 7(2), 34-46. doi: 10.11648/j.eco.20180702.12

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AMA Style

Pasquale Lucio Scandizzo, Maria Rita Pierleoni. The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective. Economics. 2018;7(2):34-46. doi: 10.11648/j.eco.20180702.12

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@article{10.11648/j.eco.20180702.12,
  author = {Pasquale Lucio Scandizzo and Maria Rita Pierleoni},
  title = {The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective},
  journal = {Economics},
  volume = {7},
  number = {2},
  pages = {34-46},
  doi = {10.11648/j.eco.20180702.12},
  url = {https://doi.org/10.11648/j.eco.20180702.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20180702.12},
  abstract = {This paper considers the problem of the determinants of income distribution in the light of the recent hypotheses advanced by Piketty on the evolution of the capitalistic system. It first reinterprets Piketty’s analysis in the context of a modified Cambridge model, where functional income distribution can adjust to ensure equality between a warranted rate and a natural rate of growth. The paper shows that this model yields some of the effects depicted by Piketty’s analysis through the rate of return to capital and the exogenous growth rate, if not only the functional, but also the personal distribution of income reacts to equilibrate the economy in response to divergent growth in the goods and labor markets. These results imply that the capital share of income and the share of the richer part of the population tend to move in the opposite direction in response to growth, so that, especially under declining growth, the fiscal treatment of capital and wealth should be different, with lower taxation for productive capital and increasing progressivity for income taxes. The main results of theoretical analysis are tested on data for the last 40 years of performance of the Italian economy, finding some significant consistency between the hypotheses formulated on the basis of the theoretical considerations above and the empirical evidence.},
 year = {2018}
}

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TY  - JOUR
T1  - The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective
AU  - Pasquale Lucio Scandizzo
AU  - Maria Rita Pierleoni
Y1  - 2018/10/13
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PB  - Science Publishing Group
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AB  - This paper considers the problem of the determinants of income distribution in the light of the recent hypotheses advanced by Piketty on the evolution of the capitalistic system. It first reinterprets Piketty’s analysis in the context of a modified Cambridge model, where functional income distribution can adjust to ensure equality between a warranted rate and a natural rate of growth. The paper shows that this model yields some of the effects depicted by Piketty’s analysis through the rate of return to capital and the exogenous growth rate, if not only the functional, but also the personal distribution of income reacts to equilibrate the economy in response to divergent growth in the goods and labor markets. These results imply that the capital share of income and the share of the richer part of the population tend to move in the opposite direction in response to growth, so that, especially under declining growth, the fiscal treatment of capital and wealth should be different, with lower taxation for productive capital and increasing progressivity for income taxes. The main results of theoretical analysis are tested on data for the last 40 years of performance of the Italian economy, finding some significant consistency between the hypotheses formulated on the basis of the theoretical considerations above and the empirical evidence.
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Author Information

Pasquale Lucio Scandizzo

Center for Economic and International Studies (CEIS), Tor Vergata University, Rome, Italy
Maria Rita Pierleoni

Department of Economic Planning, Presidency of Council of Ministers, Rome, Italy

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Pasquale Lucio Scandizzo, Maria Rita Pierleoni. (2018). The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective. Economics, 7(2), 34-46. https://doi.org/10.11648/j.eco.20180702.12

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ACS Style

Pasquale Lucio Scandizzo; Maria Rita Pierleoni. The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective. Economics. 2018, 7(2), 34-46. doi: 10.11648/j.eco.20180702.12

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AMA Style

Pasquale Lucio Scandizzo, Maria Rita Pierleoni. The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective. Economics. 2018;7(2):34-46. doi: 10.11648/j.eco.20180702.12

Copy | Download

@article{10.11648/j.eco.20180702.12,
  author = {Pasquale Lucio Scandizzo and Maria Rita Pierleoni},
  title = {The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective},
  journal = {Economics},
  volume = {7},
  number = {2},
  pages = {34-46},
  doi = {10.11648/j.eco.20180702.12},
  url = {https://doi.org/10.11648/j.eco.20180702.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20180702.12},
  abstract = {This paper considers the problem of the determinants of income distribution in the light of the recent hypotheses advanced by Piketty on the evolution of the capitalistic system. It first reinterprets Piketty’s analysis in the context of a modified Cambridge model, where functional income distribution can adjust to ensure equality between a warranted rate and a natural rate of growth. The paper shows that this model yields some of the effects depicted by Piketty’s analysis through the rate of return to capital and the exogenous growth rate, if not only the functional, but also the personal distribution of income reacts to equilibrate the economy in response to divergent growth in the goods and labor markets. These results imply that the capital share of income and the share of the richer part of the population tend to move in the opposite direction in response to growth, so that, especially under declining growth, the fiscal treatment of capital and wealth should be different, with lower taxation for productive capital and increasing progressivity for income taxes. The main results of theoretical analysis are tested on data for the last 40 years of performance of the Italian economy, finding some significant consistency between the hypotheses formulated on the basis of the theoretical considerations above and the empirical evidence.},
 year = {2018}
}

Copy | Download

TY  - JOUR
T1  - The Distribution of Wealth and Real Growth in Italy: A Post-Keynesian Perspective
AU  - Pasquale Lucio Scandizzo
AU  - Maria Rita Pierleoni
Y1  - 2018/10/13
PY  - 2018
N1  - https://doi.org/10.11648/j.eco.20180702.12
DO  - 10.11648/j.eco.20180702.12
T2  - Economics
JF  - Economics
JO  - Economics
SP  - 34
EP  - 46
PB  - Science Publishing Group
SN  - 2376-6603
UR  - https://doi.org/10.11648/j.eco.20180702.12
AB  - This paper considers the problem of the determinants of income distribution in the light of the recent hypotheses advanced by Piketty on the evolution of the capitalistic system. It first reinterprets Piketty’s analysis in the context of a modified Cambridge model, where functional income distribution can adjust to ensure equality between a warranted rate and a natural rate of growth. The paper shows that this model yields some of the effects depicted by Piketty’s analysis through the rate of return to capital and the exogenous growth rate, if not only the functional, but also the personal distribution of income reacts to equilibrate the economy in response to divergent growth in the goods and labor markets. These results imply that the capital share of income and the share of the richer part of the population tend to move in the opposite direction in response to growth, so that, especially under declining growth, the fiscal treatment of capital and wealth should be different, with lower taxation for productive capital and increasing progressivity for income taxes. The main results of theoretical analysis are tested on data for the last 40 years of performance of the Italian economy, finding some significant consistency between the hypotheses formulated on the basis of the theoretical considerations above and the empirical evidence.
VL  - 7
IS  - 2
ER  -

Copy | Download