A Supplementary Note on Professor Hein's (2013) Version of A Kaleckian Debt Accumulation

Within the framework of the Kaleckian baseline model where firms finance investment by equities and debt, this note is concerned with a recent proposal by E. Hein to replace the common concept of a given retention rate with a given dividend rate. Considering in more detail the implications of his additional assumption of constant stock prices, it is revealed that the retained earnings of the firms will then be non‐positive in a long‐run financial equilibrium. It is furthermore shown that another and empirically more plausible assumption on the firms’ equity issuance policy overcomes this deficiency and can also imply numerically acceptable retention rates.