Monetary Policy Under Steindlian Mark-up Dynamics

Soumya Datta

Review of Political Economy, 2021, vol. 33, issue 2, 236-260

Abstract: We formulate a macrodynamic model of interaction between a post-Keynesian investment function with endogenous capacity utilization and pro-cyclical mark-up over wage costs in a demand-constrained closed economy. The main objective of the study is to examine whether, in the absence of effective collective bargaining by the workers, monetary policy can resolve class conflict and maintain social stability. We consider a modified version of the counter-cyclical Taylor-type interest-rate rules that targets income distribution through the rate of capacity utilization. We explore the extent to which a combination of pro-cyclical mark-up dynamics and counter-cyclical interest-rate rules can stabilize potentially unstable investment dynamics. We also examine the effectiveness of monetary policy in the form of interest-rate rules in stabilizing output and income distribution.

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09538259.2020.1824757 (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: https://EconPapers.repec.org/RePEc:taf:revpoe:v:33:y:2021:i:2:p:236-260

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CRPE20

DOI: 10.1080/09538259.2020.1824757

Access Statistics for this article

Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon

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