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An alternative model to the open-economy "new consensus" for the analysis of inflation targeting

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  • Ricardo Summa

    (Federal University of Rio de Janeiro, Brazil)

Abstract

In this paper we will discuss a demand-led growth model which is constrained by economic policy. In this way, we will incorporate an inflation targeting regime in the sraffian supermultiplier model in order to analyze how economic policy can influence the growth rate of productive capacity. We will analyze an open-economy were inflation is a cost-push phenomenon and the monetary authority can manage the nominal exchange rate through changes in interest rate differentials. As functional income distribution will depend on the evolution of nominal wages, exchange rate and interest rate, we will show that inflation target system, in addition of not being neutral in terms of long run growth, also can lead to different outcomes in terms of functional income distribution

Suggested Citation

  • Ricardo Summa, 2016. "An alternative model to the open-economy "new consensus" for the analysis of inflation targeting," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 17(3), pages 310-323.
    • Handle: RePEc:anp:econom:v:17:y:2016:3:310_323
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    Cited by:

    1. Summa, Ricardo de Figueiredo, 2022. "Alternative uses of functional finance: Lerner, MMT and the Sraffiansh," IPE Working Papers 175/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. Guilherme Spinato Morlin & Nikolas Passos & Riccardo Pariboni, 2021. "Growth theory and the growth model perspective: Insights from the supermultiplier," Department of Economics University of Siena 869, Department of Economics, University of Siena.
    3. Ricardo Summa & Franklin Serrano, 2018. "Distribution and Conflict Inflation in Brazil under Inflation Targeting, 1999–2014," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(2), pages 349-369, June.

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