IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Income Distribution Consensus and Macroeconomic Stability in a New Keynesian Framework

Listed author(s):
  • De Villé, Philippe

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Germain, Marc

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

It is widely agreed that conflict or consensus on macroeconomic distribution of income between firms and wage-earners is important for macroeconomic stability. A new Keynesian model is developed with nominal price rigidities prevailing because of the sequential structure of wage ; price and production decisions. The model has also very strong traditional Keynesian features : importance of the expectation by firms and of the distribution of income for the determination of employment, existence of nominal wage rigidities because of the bargaining structure. Different regimes can be identified according to two criteria : given their expectations about demand are firms " rationed " to the extent that effective demand is insufficient to absorb current potential output, actual profits being in that case smaller than expected ones ? Are workers on the other hand satisfied to the extent that the effective labor relative income share is equal or greater than the desired one ? The possible "disequilibria" set up dynamic adjustments of the nominal wage and of the demand expectations by firms. Stability of the various regimes are analyzed and some comparative static analyses of the stationary solutions are performed when either investment demand by firms or labor productivity are subjected to exogeneous change. This is done both for an "income distribution sensitive economy" and a "low demand economy". The former will more likely converge to an inflationary non-equilibrium stationary solution with lower real output and employment levels than the latter.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1992009.

in new window

Length: 28
Date of creation: 01 Feb 1992
Handle: RePEc:ctl:louvir:1992009
Contact details of provider: Postal:
Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium)

Fax: +32 10473945
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:1992009. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne DAVISTER-LOGIST)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.