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
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.
References: Add references at CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Working Paper: Economic growth and income distribution with heterogeneous preferences on the real exchange rate (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
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
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 ().