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Cambridge Journal of Economics Advance Access originally published online on November 26, 2008
Cambridge Journal of Economics 2009 33(3):467-493; doi:10.1093/cje/ben039
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Right arrow E21 - Consumption; Saving; Wealth
Right arrow E22 - Capital; Investment; Capacity
Right arrow E25 - Aggregate Factor Income Distribution
Right arrow G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
Right arrow G35 - Payout Policy
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© The Author 2008. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

This article appears in the following Cambridge Journal of Economics issue: Special focus: The intellectual legacy of Brian Reddaway [View the issue table of contents]

A synthetic, stock–flow consistent macroeconomic model of ‘financialisation’

Till van Treeck*

* Macroeconomic Policy Institute (IMK) in the Hans Boeckler Foundation

Address for correspondence: IMK in the Hans Boeckler Foundation, Hans-Boeckler-Straße 39, 40476 Duesseldorf, Germany; email: till-van-treeck{at}boeckler.de

This article is centred around the notions of shareholder value orientation and financialisation. Shareholder value orientation is reflected by a high dividend payout ratio applied by firms and the reluctance of firms to finance physical investment via new equity issues. Financialisation is the more general development towards an increased importance of the financial sector of the economy relative to the non-financial sector. In this article, a synthetic, stock-flow consistent model is developed that attempts to encompass some important recent works on the effects of financialisation. This includes contributions from the fields of mainstream information economics and post-Keynesian economics. We conduct simulations reflecting increased shareholder value orientation, and show that the results are consistent with important stylised facts.

Key Words: Stocks and flows • Investment finance • Payout policy • Wealth and consumption • Income distribution

JEL classifications: E21, E22, E25, G32, G35

Manuscript received July 30, 2007; final version received August 2, 2008.


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