EconPapers    
Economics at your fingertips  
 

Economic growth and income distribution with heterogeneous preferences on the real exchange rate

Gilberto Lima () and Gabriel Porcile ()

Journal of Post Keynesian Economics, 2013, vol. 35, issue 4, 651-674

Abstract: We develop a dynamic model of capacity utilization and growth taking into account the codetermination of international competitiveness (measured by the real exchange rate) and income distribution. It follows that distribution, capacity utilization, and growth vary with the real exchange rate depending on the source of change in the latter. Meanwhile, the nominal exchange rate (markup) varies whenever the real exchange rate differs from the level preferred by the government (capitalists). While there is a medium-run equilibrium when capitalists and the government share a preferred real exchange rate, convergence to it is not ensured. Indeed, when the government is primarily concerned with preserving workers' share in income when managing the nominal exchange rate, a limit cycle arises: the economy goes through endogenous cyclical fluctuations in real exchange rate and growth that resemble the experience of several developing countries. Hence, growth regressions featuring the real exchange rate have to properly take into account the codetermination of the real exchange rate and the functional distribution of income.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.2753/PKE0160-3477350407 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Economic growth and income distribution with heterogeneous preferences on the real exchange rate (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:35:y:2013:i:4:p:651-674

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MPKE20

Access Statistics for this article

More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2019-06-06
Handle: RePEc:mes:postke:v:35:y:2013:i:4:p:651-674