Kaleckian Models of Conflict Inflation, Distribution and Employment: A Comparative Analysis

Eckhard Hein and Christoph Häusler

Review of Political Economy, 2024, vol. 36, issue 4, 1436-1464

Abstract: This paper conducts a systematic comparison of two main textbook variants within the Kaleckian tradition of post-Keynesian conflict inflation and distribution theory: the Blecker and Setterfield (2019) and Lavoie (1992; 2022) (BSL) model based on Dutt (1987), and the Hein (2023a) and Hein and Stockhammer (2011) (HS) model founded on Rowthorn (1977). Focusing on a basic closed economy framework sans government, we explore various iterations of each approach. Our analysis reveals that disparities chiefly centre around the treatment of price inflation expectations (‘indexation’) and the incorporation of bargaining power in wage- and price-inflation equations. BSL variants generally yield stable price Phillips curves, stable distribution and employment curves, and hence stable equilibria. Only the BSL-3 variant with complete indexation and complete pass-through generates shifting Phillips and employment curves, implying instability. It is thus similar to the HS-0 approach, which has bargaining power and complete indexation representing adaptive expectations in wage inflation and incomplete pass-through in price inflation. Introducing a workers’ wage share target directly into the wage-inflation equation, but keeping full indexation/adaptive expectations in wage inflation and incomplete pass-through in price inflation, allows for stable and even flat Phillips curves, stable distribution and employment curves, and hence stable equilibria in the HS approach.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09538259.2024.2355557 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Kaleckian models of conflict inflation, distribution and employment: A comparative analysis (2024)
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:36:y:2024:i:4:p:1436-1464

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

DOI: 10.1080/09538259.2024.2355557

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 ().