Economics at your fingertips  

Pushing on a String: Monetary Policy, Growth Models and the Persistence of Low Inflation in Advanced Capitalism

Hielke Van Doorslaer and Mattias Vermeiren

New Political Economy, 2021, vol. 26, issue 5, 797-816

Abstract: In this article we examine the limited effectiveness of major advanced central banks’ expansionary measures – particularly quantitative easing (QE) – in raising inflation from a post-Keynesian growth model perspective that distinguishes the sectoral-allocative effects of these policies from their class-distributive effects. In terms of sectoral-allocative effects, we empirically link the weak recovery of aggregate demand to the lack of rebalancing of the debt-led growth and export-led growth models and highlight the role of QE in reproducing these growth models. In terms of class-distributive effects, we draw attention to the flattening of the Phillips curve in advanced capitalist economies and explain this flattening from a post-Keynesian conflict model of inflation, pointing to the weakening of labour’s bargaining power as well as to the role of central banks’ overly premature withdrawal of monetary stimulus in contributing to that weakening. Finally, our analysis points to the entrenchment of a self-defeating macroeconomic policy mix (consisting of combination of loose monetary policy and restrictive fiscal policy) in debt-led and export-led growth models, which will continue to thwart efforts of central banks to significantly raise inflation.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
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:

Ordering information: This journal article can be ordered from

DOI: 10.1080/13563467.2020.1858774

Access Statistics for this article

New Political Economy is currently edited by Professor Colin Hay

More articles in New Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

Page updated 2023-01-07
Handle: RePEc:taf:cnpexx:v:26:y:2021:i:5:p:797-816