Investment, profit and growth

Michael Roberts Blog

I’m always banging on about the close connection between the movement of investment (expenditure on the means of production) and economic growth.  In my view, the evidence is overwhelming (The profits-investment nexus) that it is investment that is the main swing factor in booms and slumps, not personal consumption as many Keynesians focus on.  And it is also a key factor in the long-term growth of labour productivity.

A new analysis by the Levy Forecasting Center, an institute that follows closely the views of Keynes, Kalecki and Hyman Minsky, also confirms this view.  The report comments that “unsurprisingly, net fixed investment is strongly related to growth.”  

The slowdown in real GDP growth since the end of the Great Recession is clearly connected to the slowdown in business investment growth

Business investment in the US has ground to a halt and the age of the existing means of…

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