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Conflicting claims and equilibrium adjustment processes in a stock-flow consistent macro model

Author

Listed:
  • Till van Treeck

    () (IMK at the Hans Boeckler Foundation)

  • Thomas Dallery

    () (University of Lille 1, Clerse)

Abstract

We revisit the old but still vibrant Post-Keynesian debate over "fully-adjusted positions", defined by the long-run equality of actual and standard utilisation rates. The central proposition of this paper is that in a world where different groups inside and outside firms have different objectives, the equality of actual and standard utilisation should not be treated as the (only possible) long-run equilibrium condition. The argument is illustrated in a model of target return pricing with conflict inflation, building on Lavoie (2002, 2003). A "common language" for the conflicting claims by shareholders, managers, workers and banks is developed in terms of target profit rates, and it is shown that these contradictory claims can be partly reconciled through variations in the utilisation rate. The analysis unifies history and equilibrium in the sense that the nature of and the adjustment to the final equilibrium position depends on the objectives of the dominant social groups. We distinguish a "Fordist regime" and a "financialisation regime" and produce simulation results within a simple stock-flow consistent model that are broadly consistent with the stylised facts of these distinct historical phases of capitalism.

Suggested Citation

  • Till van Treeck & Thomas Dallery, 2008. "Conflicting claims and equilibrium adjustment processes in a stock-flow consistent macro model," IMK Working Paper 09-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  • Handle: RePEc:imk:wpaper:9-2008
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    File URL: http://www.boeckler.de/pdf/p_imk_wp_9_2008.pdf
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    References listed on IDEAS

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    1. Till van Treeck, 2009. "A synthetic, stock--flow consistent macroeconomic model of 'financialisation'," Cambridge Journal of Economics, Oxford University Press, vol. 33(3), pages 467-493, May.
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    Citations

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    Cited by:

    1. Eckhard Hein & Nina Dodig, 2014. "Financialisation, distribution, growth and crises – long-run tendencies," Working papers wpaper23, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    2. Eckhard Hein & Till van Treeck, 2010. "‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 13 Edward Elgar Publishing.
    3. repec:oup:cambje:v:42:y:2018:i:1:p:47-94. is not listed on IDEAS
    4. Christian A Belabed & Thomas Theobald & Till van Treeck, 2018. "Income distribution and current account imbalances," Cambridge Journal of Economics, Oxford University Press, vol. 42(1), pages 47-94.
    5. Hein, Eckhard, 2011. "Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies," MPRA Paper 31180, University Library of Munich, Germany.
    6. Eckhard Hein & Marc Lavoie & Till van Treeck, 2011. "Some instability puzzles in Kaleckian models of growth and distribution: a critical survey," Cambridge Journal of Economics, Oxford University Press, vol. 35(3), pages 587-612.
    7. Eckhard Hein, 2012. ""Financialization," distribution, capital accumulation, and productivity growth in a post-Kaleckian model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(3), pages 475-496.
    8. Dögüs, Ilhan, 2016. "A Minskyan criticism on the shareholder pressure approach of financialisation," Discussion Papers 53, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    9. Eckhard Hein, 2016. "Secular stagnation or stagnation policy? Steindl after Summers," PSL Quarterly Review, Economia civile, vol. 69(276), pages 3-47.

    More about this item

    Keywords

    Macroeconomic policies; New Consensus Model; Post-Keynesian Model; inflation targeting;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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