TITLE:
Functional Distribution of Income, Floating Exchange Rates and Inflation Targets in a Macrodynamic Model
AUTHORS:
Luciano Dias de Carvalho, Luciano Ferreira Gabriel
KEYWORDS:
Functional Income Distribution, Macroeconomic Policies, Post-Keynesian Macrodynamics
JOURNAL NAME:
Modern Economy,
Vol.15 No.3,
March
19,
2024
ABSTRACT: This article presents a post-Keynesian macrodynamic model for a small
open economy, with floating exchange rates
and inflation targeting regime. It models, mathematically, an economy with
distributive conflict, technological progress and labor supply as endogenous
from different theoretical strands. Moreover, investment decisions are
based on the differential between the rate of profit and the interest rate. The effects of opening the capital account on the
inflation rate, the interest rate and the employment growth rate depend on the
income distribution prevailing in the economy. In the long run, the model
presents multiple equilibrium in two different accumulation regimes: 1) profit
led and 2) wage led.