IDEAS home Printed from https://ideas.repec.org/p/ctl/louvir/1992009.html
   My bibliography  Save this paper

Income Distribution Consensus and Macroeconomic Stability in a New Keynesian Framework

Author

Listed:
  • 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))

Abstract

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.

Suggested Citation

  • De Villé, Philippe & Germain, Marc, 1992. "Income Distribution Consensus and Macroeconomic Stability in a New Keynesian Framework," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1992009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:1992009
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below 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.

    References listed on IDEAS

    as
    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    2. repec:adr:anecst:y:1992:i:27:p:04 is not listed on IDEAS
    3. Abel, Andrew B & Blanchard, Olivier J, 1986. "The Present Value of Profits and Cyclical Movements in Investment," Econometrica, Econometric Society, vol. 54(2), pages 249-273, March.
    4. Edmond Malinvaud, 1987. "Capital productif, incertitudes et profitabilité," Annals of Economics and Statistics, GENES, issue 5, pages 1-36.
    5. repec:adr:anecst:y:1987:i:5 is not listed on IDEAS
    6. Omar Licandro, 1992. "Investment Dynamics and Capacity Utilization under Monopolistic Competition," Annals of Economics and Statistics, GENES, issue 27, pages 91-113.
    7. repec:adr:anecst:y:1987:i:5:p:01 is not listed on IDEAS
    8. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    9. James G. MacKinnon, 1990. "Critical Values for Cointegration Tests," Working Papers 1227, Queen's University, Department of Economics.
    10. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-224, January.
    11. repec:adr:anecst:y:1992:i:27 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    income; economic models; production;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: http://edirc.repec.org/data/iruclbe.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.