Modern Economy

Volume 15, Issue 3 (March 2024)

ISSN Print: 2152-7245   ISSN Online: 2152-7261

Google-based Impact Factor: 0.96  Citations  

Functional Distribution of Income, Floating Exchange Rates and Inflation Targets in a Macrodynamic Model

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DOI: 10.4236/me.2024.153013    125 Downloads   460 Views  

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.

Share and Cite:

de Carvalho, L. and Gabriel, L. (2024) Functional Distribution of Income, Floating Exchange Rates and Inflation Targets in a Macrodynamic Model. Modern Economy, 15, 251-273. doi: 10.4236/me.2024.153013.

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