Political and economic interaction: income distribution and economic growth

The aim of this paper is to model how economic interests linked to the distribution between profits and wages can influence political decisions and how in turn such decisions can influence the economy. The “influence function approach” (Becker, 1983), which concerns behaviours of interest groups, and the “interest function approach” (van Winden, 1983), which concerns political decisions, are chosen to describe the effect of the capitalists’ and workers’ interest in the policymakers’ decisional process. The neo-Kaleckian approach (Rowthorn, 1982) is chosen to describe the operation of the economy. The analysis shows that the fiscal policy has to take into account both the capitalists’ and workers’ interests if it aims to favour a balanced change in the economy over time.