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Emulation, indebtedness and income distribution: A monetary theory of production approach

  • Guglielmo Forges Davanzati

    ()

    (University of Salento)

  • Andrea Pacella

    (University of Salento)

The aim of this paper is to study the effect of emulation within a basic schema of the monetary theory of production (MTP). A theoretical model is presented, where workers set their target level of consumption based on the comparison with other workers taken as reference. It is shown that emulation can play a crucial role in increasing workers’ propensity to indebtedness. As a result, profits increase and so does the price level, thus generating a decline of the real wage. Moreover, the existence of indebtedness can provide a further solution to the socalled »paradox of profits« within the MTP.

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File URL: http://www.elgaronline.com/view/journals/ejeep/7-1/ejeep.2010.01.12.xml
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Article provided by Edward Elgar Publishing in its journal Intervention.

Volume (Year): 7 (2010)
Issue (Month): 1 ()
Pages: 147-165

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Handle: RePEc:elg:ejeepi:v:7:y:2010:i:1:p:147-165
Contact details of provider: Web page: http://www.elgaronline.com/ejeep

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  1. Corneo, Giacomo & Jeanne, Olivier, 1999. "Pecuniary emulation, inequality and growth," European Economic Review, Elsevier, vol. 43(9), pages 1665-1678, October.
  2. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275.
  3. Jean-Francois Renaud, 2000. "The Problem of the Monetary Realization of Profits in a Post Keynesian Sequential Financing Model: Two solutions of the Kaleckian option," Review of Political Economy, Taylor & Francis Journals, vol. 12(3), pages 285-303.
  4. Riccardo Bellofiore & Guglielmo Forges Davanzati & Riccardo Realfonzo, 2000. "Marx Inside the Circuit: Discipline device, wage bargaining and unemployment in a sequential monetary economy," Review of Political Economy, Taylor & Francis Journals, vol. 12(4), pages 403-417.
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  7. Samuel Bowles & Yongjin Park, 2003. "Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right," Department of Economics University of Siena 409, Department of Economics, University of Siena.
  8. Cynamon Barry Z. & Fazzari Steven M., 2008. "Household Debt in the Consumer Age: Source of Growth--Risk of Collapse," Capitalism and Society, De Gruyter, vol. 3(2), pages 1-32, October.
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  11. Ryan R. Brady, 2006. "Structural Breaks and Consumer Credit: Is Consumption Smoothing Finally a Reality?," Departmental Working Papers 13, United States Naval Academy Department of Economics.
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  13. Tullio Jappelli & Marco Pagano, 1994. "Saving, Growth, and Liquidity Constraints," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 83-109.
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  16. Matthew Abrena & Gerald Epstein & Dorothy Power, 2003. "Trends In The Rentier Income Share In OECD Countries, 1960-2000," Working Papers wp58a, Political Economy Research Institute, University of Massachusetts at Amherst.
  17. Alain Parguez & Jean-Gabriel Bliek, 2007. "Full Employment: Can It Be a Key Policy Objective for Europe?," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 36(3), pages 24-46, September.
  18. Paul S. Mills & John Kiff, 2007. "Money for Nothing and Checks for Free; Recent Developments in U.S. Subprime Mortgage Markets," IMF Working Papers 07/188, International Monetary Fund.
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