Do demand and profitability stimulate capital accumulation? An analysis for Brazil

Morrone, Henrique

2015-08

LC/G.2643-P
9

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This article tests whether the profit share of gdp and capacity utilization affect capital accumulation in Brazil in the period 1950-2008 (in the sense of Granger causality). The methodology developed by Toda and Yamamoto (1995) is used to verify the Granger non-causality hypothesis. The results show that capacity utilization “Granger-causes” capital accumulation in the Brazilian economy and, also that the profit share of gdp does not “Granger-cause” the national investment-capital ratio. This corroborates the Kaleckian proposal based on the fundamental role of the accelerator, and suggests that the Brazilian economy can grow with either a concentration or a de-concentration of income, provided a suitable institutional arrangement is in place.

ECONOMETRIC MODELS; ECONOMIC GROWTH; CAPITAL FORMATION; ECONOMIC DEVELOPMENT; MODELOS ECONOMETRICOS; CRECIMIENTO ECONOMICO; FORMACION DE CAPITAL; DESARROLLO ECONOMICO;