Abstract
SUMMARYIt has become customary to dichotomize research results in functional income distribution in terms of neo‐classical vs. neo‐Keynesian theories with appropriate footnotes referring to fringe theories and distinguished predecessors. In this note the latter set is enlarged! Erik Lindahl's masterly contribution to this subject is presented in a generalized version of a Kaldor‐Pasinetti model. In Penning Politikens Medel (1930) Lindahl poses the question of how savings will be adjusted to equilibrium with a higher level of investment which, in turn, has been caused by a lowering of the rate of interest. The equilibrium level is attained, in a characteristically Kaldor‐Pasinetti way, by a redistribution of incomes.
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