Phimac Seminar-Matheus Grasselli-Testing the Keen Model for the United States
Jan 27, 2023
11:45AM to 1:00PM
Date(s) - 27/01/2023
11:45 am - 1:00 pm
Abstract: In this talk I describe recent work with Alex Shkolnik (UCSB) and Steve Li (University of Chicago), where we use 60 years of macroeconomic data for the United States to test the Keen model for the dynamics of wages, employment, and private debt. We begin with a careful construction of the time series for net debt of the firms sector from balance sheet information obtained from the US national accounts and show how this differs from a commonly used metric for private debt published by the Bank of International Settlements. This is followed by a detailed examination of each assumption of the model in light of the statistical properties of the corresponding time series, including the use of a Leontief production function with a constant capital-to-output ratio. A comparison between the observed change in debt and the difference between investment and profits (which are assumed to be the same in the model, but are far from it in the data), leads to introduction of successive extensions, such as the inclusion of taxes, dividends, and ultimately a residual term identified with financial speculation.
Location: Hamilton Hall, Room 410