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International Competition and Distributive Class Conflict in an Open Economy Kaleckian Model

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  • Hiroaki Sasaki
  • Ryunosuke Sonoda
  • Shinya Fujita
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    Abstract

    This paper constructs an open economy Kaleckian model in which the international competition affects the bargaining process between firms and workers, and investigates the effect of such bargaining on macroeconomy. If the real exchange rate has little impact on the trade balance, the economy is stable, whereas if it has a larger impact on the trade balance, the economy is unstable. Moreover, we show that the effect of a change in the bargaining power on aggregate demand depends not only on the demand regimes but also on which agent bears the burden arising from the international price competition.

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    File URL: http://www.econ.kyoto-u.ac.jp/projectcenter/Paper/e-12-005.pdf
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    Bibliographic Info

    Paper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-12-005.

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    Length: 33 pages
    Date of creation: Jul 2012
    Date of revision:
    Handle: RePEc:kue:dpaper:e-12-005

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    Keywords: Kaleckian model; Open economy; International price competition; Wage bargaining;

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    References

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    1. Robert A. Blecker, 2010. "Open economy models of distribution and growth," Working Papers, American University, Department of Economics 2010-03, American University, Department of Economics.
    2. Stockhammer, Engelbert & Onaran, Ozlem, 2004. "Accumulation, distribution and employment: a structural VAR approach to a Kaleckian macro model," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 15(4), pages 421-447, December.
    3. Amit Bhaduri, 2006. "Endogenous economic growth: a new approach," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 30(1), pages 69-83, January.
    4. Blecker, Robert A & Seguino, Stephanie, 2002. "Macroeconomic Effects of Reducing Gender Wage Inequality in an Export-Oriented, Semi-industrialized Economy," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 6(1), pages 103-19, February.
    5. Engelbert Stockhammer & �zlem Onaran & Stefan Ederer, 2009. "Functional income distribution and aggregate demand in the Euro area," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 33(1), pages 139-159, January.
    6. Amitava Krishna Dutt, 2006. "Aggregate Demand, Aggregate Supply and Economic Growth," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 20(3), pages 319-336.
    7. Massimiliano La Marca, 2010. "Real Exchange Rate, Distribution And Macro Fluctuations In Export-Oriented Economies," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 61(1), pages 124-151, 02.
    8. Daniele Tavani & Peter Flaschel & Lance Taylor, 2011. "Estimated non-linearities and multiple equilibria in a model of distributive-demand cycles," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 25(5), pages 519-538, October.
    9. Mario Cassetti, 2012. "Macroeconomic Outcomes Of Changing Social Bargains. The Feasibility Of A Wage‐Led Open Economy Reconsidered," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 63(1), pages 64-91, 02.
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    11. Marco Missaglia, 2007. "Demand Policies For Long-Run Growth: Being Keynesian Both In The Short And In The Long Run?," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 58(1), pages 74-94, 02.
    12. Engelbert Stockhammer & Eckhard Hein & Lucas Grafl, 2007. "Globalization and the effects of changes in functional income distribution on aggregate demand in Germany," Department of Economics Working Papers wuwp114, Vienna University of Economics, Department of Economics.
    13. Jose Antonio Cordero, 2002. "A Model of Growth and Conflict Inflation for a Small Open Economy," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 53(3), pages 261-289, 08.
    14. Nelson H. Barbosa-Filho & Lance Taylor, 2006. "Distributive And Demand Cycles In The Us Economy-A Structuralist Goodwin Model," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 389-411, 07.
    15. Blecker, Robert A, 1989. "International Competition, Income Distribution and Economic Growth," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 13(3), pages 395-412, September.
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    17. C. W.M. Naastepad & Servaas Storm, 2007. "OECD demand regimes (1960-2000)," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 29(2), pages 211-246, January.
    18. Robert A. Blecker, 1998. "International Competitiveness, Relative Wages, and the Balance-of-Payments Constraint," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 20(4), pages 495-526, July.
    19. Hiroaki Sasaki, 2011. "Conflict, growth, distribution, and employment: a long-run Kaleckian model," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 25(5), pages 539-557, September.
    20. Mario Cassetti, 2003. "Bargaining power, effective demand and technical progress: a Kaleckian model of growth," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 27(3), pages 449-464, May.
    21. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 32(3), pages 479-511, May.
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