Kaldor and Piketty's Facts: The Rise of Monopoly Power in the United States / Gauti B. Eggertsson, Jacob A. Robbins, Ella Getz Wold.

Format:

Book

Author/Creator:

Eggertsson, Gauti B.

Contributor:

National Bureau of Economic Research.

Robbins, Jacob A.

Wold, Ella Getz.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24287.

NBER working paper series no. w24287

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Kaldor and Piketty’s Facts

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

The macroeconomic data of the last thirty years has overturned at least two of Kaldor's famous stylized growth facts: constant interest rates, and a constant labor share. At the same time, the research of Piketty and others has introduced several new and surprising facts: an increase in the financial wealth-to-output ratio in the US, an increase in measured Tobin's Q, and a divergence between the marginal and the average return on capital. In this paper, we argue that these trends can be explained by an increase in market power and pure profits in the US economy, i.e., the emergence of a non-zero-rent economy, along with forces that have led to a persistent long term decline in real interest rates. We make three parsimonious modifications to the standard neoclassical model to explain these trends. Using recent estimates of the increase in markups and the decrease in real interest rates, we show that our model can quantitatively match these new stylized macroeconomic facts.

Notes:

Print version record

February 2018.