Working Paper No 879



comparative statics exercises of the model are altered and some complications arise. This might be

a useful and necessary extension of the model for certain issues and applications, but it cannot be

taken as a critique of the original model and does not make it any more or less helpful.

To sum up, Skott’s argument is not valid as a critique against the Kaleckian model. A model

cannot be criticized based on the complications that arise in a less abstract version of the model.

These kinds of complications are to be expected in any model and they neither make the

Kaleckian model and the concept of distribution-led growth any more or less helpful nor

constitute a fundamental weakness of them. To paraphrase Keynes (from section 2.1): I do not see

that, at the level of abstraction in which the Kaleckian model works, any different treatment is

required. In a realistic study it makes, of course, a difference whether one is considering what

institutional factors and social norms lead to changes in distribution. But the sort of

considerations that are relevant to this issue belong to a different level.

To be sure, the issues raised by Skott point to interesting future directions for theoretical and

empirical research around the Kaleckian model. A theoretical and empirical investigation of the

role of the various institutional factors and social norms is such a potentially interesting future

direction that can also allow for a more operational definition of the concept of distribution-led

growth and a better empirical estimation of the effects of changes in distribution on utilization and



This paper discussed two “endogeneity” critiques against the Kaleckian model of growth and

distribution. The first one, coming from a neo-Keynesian point of view, proposes a different

closure to the macro system, and maintains that income distribution becomes purely endogenous


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