Second, as Sasaki and Fujita (2012)

Second, as Sasaki and Fujita (2012) have argued, the assumption of zero dividend payments and thus a retention ratio of profits net of interest payments of 100 per cent is overly restrictive. Relaxing this assumption, Sasaki and Fujita (2012) obtain more modest or less restrictive results with respect to the instability potential, for example, in their alternative model.However, Hein (2013a) has argued that their model contains some problematic hidden assumptions and features, and that a model with equity issued by firms and held by rentiers, and hence with dividend payments to rentiers, may suffer from similar instability problems to those of the simple model in this chapter. We will show this in Chapter 10 of this book, where we accept that introducing equity held by rentiers and dividend payments makes the model more realistic. And we will show that it is indeed required when recent phenomena like the dominance of finance (‘financialization’)and the increasing shareholder value orientation of management are to be discussed.