A Note on Credit Allocation, Income Distribution, and the Circuit of Capital

dos Santos, Paulo L.

Abstract

This note considers the relationship between credit allocation and the class distribution of income in the Circuit of Capital. Production and consumption credit inject means of purchase into different phases of capitalist reproduction. Comparative-dynamic analysis of steady-state evolutions shows that in the dynamic terms of Circuit of Capital production and consumption credit respectively increase wage and profit shares of aggregate income. These findings hold more broadly for any setting where sectoral revenue elasticities of outlays are below unity. They also have direct policy relevance for advanced and middle-income economies where household borrowing has been encouraged in attempts to support demand and growth.

Citation

dos Santos, P. L. (2013). A Note on Credit Allocation, Income Distribution, and the Circuit of Capital. Metroeconomica: International Review of Economics, 65(2), 212-236. https://doi.org/10.1111/meca.12035

• Journal Article Type: Article
• Publication Date: Sep 11, 2013
• Deposit Date: Sep 20, 2013
• Publicly Available Date: Sep 12, 2113
• Print ISSN: 0026-1386
• Electronic ISSN: 1467-999X
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 65
• Issue: 2
• Pages: 212-236
• DOI: https://doi.org/10.1111/meca.12035