Growth and Employment in Europe: Sustainability and Competitiveness, Department of Economics, WU (Wirtschaftsuniversität Wien)
No 14:
Financialization and the Slowdown of Accumulation
Engelbert Stockhammer ()
Abstract: Over the past decades financial investment of
non-financial businesses has been rising and accumulation of capital goods
has been declining. The first part of the paper offers a novel theory to
explain this phenomenon. Financialization, the shareholder revolution and
the development of a market for corporate control have shifted power to
shareholders and thus changed management priorities, leading to a reduction
in the desired growth rate. In the second part the link between
accumulation and financialization is tested econometrically by means of a
time series analysis of aggregate business investment for USA, UK, France,
and Germany. Extensive test of robustness are performed. For the first
three countries evidence that confirms the negative effect of
financialization on accumulation is found. A revised version of the paper
is forthcoming in the Cambridge Journalof Economics. Please contact the
author for the revised version.
Keywords: financialization; business investment; class analysis; theory of the firm; (follow links to similar papers)
JEL-Codes: E2; D2; G2; (follow links to similar papers)
November 2000
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