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Monetary Policy, Interest Payments, Income Distribution and the Macroeconomy

Listed author(s):
  • Argitis, Georgios
  • Michopoulou, Stella

During the last two decades, Post Keynesian/Kaleckian distribution and growth models have gradually focused their attention on the effects that monetary policy and financial variables are likely to have on the macroeconomy. These models usually rely on the influence of debt, debt services and interest rate variations on the short-run and the long-run equilibrium. Nonetheless, very little attention has been paid to the empirical investigation of the major hypotheses made by this specific body of literature. The aim of this paper is to partly bridge this empirical gap. We have developed a simple Post Keynesian/Kaleckian macroeconomic model to set out the hypotheses that variations in interest payments are likely to negatively affect consumption, capital accumulation and income. Our econometric analysis uses panel data for a sample of ten OECD countries and assesses the relevance of these hypotheses.

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File URL: http://purl.umn.edu/143267
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Article provided by Review of Applied Economics in its journal Review of Applied Economics.

Volume (Year): 06 (2010)
Issue (Month): 1-2 ()
Pages:

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Handle: RePEc:ags:reapec:143267
Contact details of provider: Web page: http://www.lincoln.ac.nz/story11874.html

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  1. Marc Jarsulic, 1990. "Debt and Macro Stability," Eastern Economic Journal, Eastern Economic Association, vol. 16(2), pages 91-100, Apr-Jun.
  2. Eckhard Hein & Carsten Ochsen, 2003. "Regimes of Interest Rates, Income Shares, Savings and Investment: A Kaleckian Model and Empirical Estimations for some Advanced OECD Economies," Metroeconomica, Wiley Blackwell, vol. 54(4), pages 404-433, November.
  3. Engelbert Stockhammer & Özlem Onaran & Stefan Ederer, 2009. "Functional income distribution and aggregate demand in the Euro area," Cambridge Journal of Economics, Oxford University Press, vol. 33(1), pages 139-159, January.
  4. Engelbert Stockhammer, 2004. "Financialisation and the slowdown of accumulation," Cambridge Journal of Economics, Oxford University Press, vol. 28(5), pages 719-741, September.
  5. A. Asimakopulos, 1975. "A Kaleckian Theory of Income Distribution," Canadian Journal of Economics, Canadian Economics Association, vol. 8(3), pages 313-333, August.
  6. Eckhard Hein, 2006. "Interest, Debt and Capital Accumulation—A Kaleckian Approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 337-352.
  7. Marc Lavoie, 1995. "Interest Rates In Post-Keynesian Models Of Growth And Distribution," Metroeconomica, Wiley Blackwell, vol. 46(2), pages 146-177, 06.
  8. George Argitis & Christos Pitelis, 2006. "Global Finance, Income Distribution And Capital Accumulation," Contributions to Political Economy, Oxford University Press, vol. 25(1), pages 63-81, August.
  9. Tracy Mott, 1989. "The Structure of Class Conflict in a Kaleckian-Keynesian Model," Economics Working Paper Archive wp_21, Levy Economics Institute.
  10. Amitava Krishna Dutt, 2006. "Maturity, Stagnation And Consumer Debt: A Steindlian Approach," Metroeconomica, Wiley Blackwell, vol. 57(3), pages 339-364, 07.
  11. Lavoie, Marc, 1995. "The Kaleckian Model of Growth and Distribution and Its Neo-Ricardian and Neo-Marxian Critiques," Cambridge Journal of Economics, Oxford University Press, vol. 19(6), pages 789-818, December.
  12. Tracy Mott & Edward Slattery, 1994. "Tax Incidence and Macroeconomic Effects in a Kaleckian Model When Profits Finance Affects Investment and Prices May Respond to Taxes," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 16(3), pages 391-409, April.
  13. Taylor, Lance, 1985. "A Stagnationist Model of Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 9(4), pages 383-403, December.
  14. George Argitis, 2008. "Inflation targeting and Keynes's political economy," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(2), pages 249-270, December.
  15. Kregel, J A, 1985. "Hamlet without the Prince: Cambridge Macroeconomics without Money," American Economic Review, American Economic Association, vol. 75(2), pages 133-139, May.
  16. Amitava Krishna Dutt, 1995. "Internal Finance And Monopoly Power In Capitalist Economies: A Reformulation Of Steindl'S Growth Model," Metroeconomica, Wiley Blackwell, vol. 46(1), pages 16-34, 02.
  17. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291.
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