Abstract
The dispute between social classes for fractions of income was a central theme for economic analysis at least since David Ricardo and Karl Marx. Its importance as an interpretative key declined with the marginalist revolution of the late nineteenth century and did not regain its central role in the conventional economic approach ever since. However, its relevance was maintained among heterodox economists such as Michal Kalecki and reinvigorated by post-Keynesian thinking. This paper seeks to offer three analytical contributions to the post- Keynesian literature: (1) it presents an integrated framework on the relationship between distributive conflict, inflation and economic growth in an open economy with government; (2) it proposes the use of a general framework, based on liquid preference, assets own interest rates, currency hierarchy and productivity differentials to understand the determinants of the spot exchange rate; and (3) it suggests a distinct monetary rule to take into account the role of interest rates on distributive conflict inflation and demand and growth regimes.
Highlights
This paper seeks to offer three analytical contributions to the post-Keynesian literature: (i) it presents an integrated framework on the relationship between distributive conflict, inflation and economic growth in an open economy with government; (ii) it proposes the use of a general framework, based on liquid preference, assets own interest rates, currency hierarchy and productivity differentials to understand the determinants of the spot exchange rate; and (iii) it suggests a distinct monetary rule to take into account the role of interest rates on distributive conflict inflation and demand and growth regimes
We intended to clarify some issues regarding the connections between distributive conflict, inflation and economic growth in the short-run from a postKeynesian point of view
The paper tried to describe the impacts of income distribution in an open economy, specially concerning to its effects on real exchange rate and its interaction with inflation and growth, in a fully integrated model
Summary
Since Rowthorn’s seminal work (1977) the connection between inflation and the dispute over national income has become a key part of post-Keynesian thought. When we evaluate the impacts of mark-ups variations, the weight of imported inputs on the cost structure, the tax rates, as well as the wage share, it is possible to perceive that all affect negatively the real exchange rate and, competitiveness of the economy. These results correspond to what intuition suggests and, by themselves, reveal nothing new. History and institutional configuration of each economy in terms of wage bargaining and competitive conditions in goods and services markets are central
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