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Financialization and Endogenous Technological Change: a Post-Kaleckian Perspective

Parui, Pintu (2018): Financialization and Endogenous Technological Change: a Post-Kaleckian Perspective.

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In post-Keynesian literature, Hein (2012a) was the first to incorporate financialization as an influential positive determinant of the rate of technological change. However, financialization is more like a two-edged sword which can affect technological change negatively as well. We capture both the positive as well as the negative effect of financialization on technological change which encapsulates the possibility of multiple equilibria. In analyzing the long run of the model we endogenize the financialization parameter as well and get richer dynamics than Hein (2012a). We show that under certain circumstances, the higher speed of diffusion of technological innovation, more regulated financial markets, and higher intra-class competition among firms are desirable for stabilizing the economy. Finally, we provide some policy prescriptions for the same.

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