Credit Money and Kaldor's 'Institutional' Theory of Income Distribution

Research output: Contribution to journalReview articlepeer-review

5 Citations (Scopus)


This paper combines two major contributions by Kaldor: the view that the supply of money, ensuing mainly from bank credit, is endogenous, and the framework which assigns a crucial role to the saving and investment behaviour of corporations in determining the general rate of profit (the neo-Pasinetti theorem). Bank loans are introduced as another means of financing investment by firms, in addition to retained profits and the new issuance of shares. The proposed model provides a convenient framework in which two different approaches in the money-endogeneity view are classified. Kaldor's neo-Pasinetti theorem is shown to hold for only one of these approaches and is then extended to include the influence of banks.

Original languageEnglish
Pages (from-to)79-99
Number of pages21
JournalReview of Political Economy
Issue number1
Publication statusPublished - 2004 Jan

Bibliographical note

Funding Information:
The author wishes to thank his research assistant, Mr Soon Ryoo, who not only provided the solutions of the systems of equations proposed in the text (the solutions are available from the author) but also made some stimulating suggestions to improve the paper. The comments of two anonymous referees are also gratefully acknowledged. This work was supported by Korea Research Foundation Grant (KRF–2000–003–C00214).

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)
  • Political Science and International Relations


Dive into the research topics of 'Credit Money and Kaldor's 'Institutional' Theory of Income Distribution'. Together they form a unique fingerprint.

Cite this