Peer-Reviewed Journal Details
Mandatory Fields
Amit Bhaduri and Srinivas Raghavendra
Review of Keynesian Economics
Wage and profit-led regimes under modern finance: An exploration
In Press
Optional Fields
Profit realization, Securitization, Commercial banking, Investment banking, Profit led, Wage led, Effective demand, Financialisation
The paper generalizes the principle of effective demand to incorporate banking and finance as two distinct sectors. The traditional commercial banking sector is regulated and the modern shadow banking sector is mostly an unregulated provider of financial services. Through a stylized model the interconnectedness between the two sectors is analyzed. The analysis shows how an almost infinite supply side capacity of finance is created and explores its relation to the level of aggregate demand in the real economy. The impact of finance on the real economy is explored in both profit and wage led regimes at different levels of interconnectedness between commercial and investment banking.
Grant Details
Publication Themes
Applied Social Sciences and Public Policy