IDEAS home Printed from https://ideas.repec.org/p/uts/wpaper/153.html
   My bibliography  Save this paper

Money and Monetary Policy in a Kaldor-Pasinetti-Sraffa-Keynes Framework

Author

Abstract

This paper investigates the role of money and the transmission of monetary policy in a model characterised by interest-insensitive expenditures and unemployment equilibria. It first outlines the structure of what is called a Kaldor-Pasinetti-Sraffa-Keynes (KPSK) model where output is determined by the principle of effective demand, expenditures are determined by income distribution, and prices are determined along Sraffian lines. It secondly explores the role of money in this kind of model, assuming first an exogenous money supply and then an endogenous one, and compares the difference between these two sets of monetary arrangements for the model’s key macroeconomic variables: output, employment and prices. This exploration provides evidence that endogenous money is a necessary condition for the attainment of an unemployment equilibrium. The paper thirdly examines the operation of a Taylor rule in the conduct of monetary policy within a KPSK model, comparing its impact with that in a neoclassical macro model where such rules generate full employment. The paper concludes with some observations about the relationship between the concepts of money supply endogeneity, the interest-insensitivity of expenditures and money non-neutrality in models of the KPSK variety.

Suggested Citation

  • Peter Docherty, 2008. "Money and Monetary Policy in a Kaldor-Pasinetti-Sraffa-Keynes Framework," Working Paper Series 153, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    • Handle: RePEc:uts:wpaper:153
    as

    Download full text from publisher

    File URL: http://www.finance.uts.edu.au/research/wpapers/wp153.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rowthorn, R E, 1977. "Conflict, Inflation and Money," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 1(3), pages 215-239, September.
    2. Peter Docherty, 2006. "Endogenous Money, Non-neutrality and Interest-sensitivity in the Theory of Long Period Unemployment," Working Paper Series 148, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    3. Mark Setterfield (ed.), 2002. "The Economics of Demand-Led Growth," Books, Edward Elgar Publishing, number 1864.
    4. Pierangelo Garegnani, 2024. "Value and Distribution in the Classical Economists and Marx," Springer Studies in the History of Economic Thought, in: Roberto Ciccone (ed.), Capital Theory, the Surplus Approach, and Effective Demand, pages 305-340, Springer.
    5. Kaldor, Nicholas, 1986. "The Scourge of Monetarism: Radcliffe Lectures," OUP Catalogue, Oxford University Press, edition 2, number 9780198772484.
    6. Pierangelo Garegnani, 2024. "Notes on Consumption, Investment and Effective Demand: I," Springer Studies in the History of Economic Thought, in: Roberto Ciccone (ed.), Capital Theory, the Surplus Approach, and Effective Demand, pages 387-409, Springer.
    7. Peter Docherty, 2005. "Money and Employment," Books, Edward Elgar Publishing, number 2578.
    8. Cottrell, Allin, 1994. "Post-Keynesian Monetary Economics," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 18(6), pages 587-605, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Docherty, 2006. "Endogenous Money, Non-neutrality and Interest-sensitivity in the Theory of Long Period Unemployment," Working Paper Series 148, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    2. Peter Docherty, 2009. "Re‐Examining The Implications Of The New Consensus: Endogenous Money And Taylor Rules In A Simple Neoclassical Macro Model," Metroeconomica, Wiley Blackwell, vol. 60(3), pages 495-524, July.
    3. Peter Docherty, 2012. "Keynes’s General Theory, the Quantity Theory of Money and Monetary Policy," Chapters, in: Thomas Cate (ed.), Keynes’s General Theory, chapter 6, Edward Elgar Publishing.
    4. Eckhard Hein, 2006. "Money, interest and capital accumulationin Karl Marx's economics: a monetary interpretation and some similaritiesto post-Keynesian approaches," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 13(1), pages 113-140.
    5. Fontanari, Claudia & Levrero, Enrico Sergio & Romaniello, Davide, 2024. "A composite index for workers’ bargaining power and the inflation rate in the United States, 1960–2018," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 682-698.
    6. Sasaki, Hiroaki, 2012. "Is the long-run equilibrium wage-led or profit-led? A Kaleckian approach," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 231-244.
    7. 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.
    8. Levrero, Enrico Sergio, 2022. "The Taylor Rule and its Aftermath: Elements for an Interpretation along Classical-Keynesian lines," Centro Sraffa Working Papers CSWP59, Centro di Ricerche e Documentazione "Piero Sraffa".
    9. Eduardo F Bastian & Sébastien Charles & Jonathan Marie, 2024. "Inflation regimes and hyperinflation: a Post-Keynesian/structuralist typology," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 48(4), pages 681-708.
    10. Brenck, Clara & Carvalho, Laura, 2020. "The equalizing spiral in early 21st century Brazil: a Kaleckian model with sectoral heterogeneity," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 298-310.
    11. Leonardo Vera, 2014. "The Simple Post-Keynesian Monetary Policy Model: An Open Economy Approach," Review of Political Economy, Taylor & Francis Journals, vol. 26(4), pages 526-548, October.
    12. Eduardo F. Bastian & Mark Setterfield, 2015. "A simple analytical model of the adverse real effects of inflation," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 38(4), pages 637-665, November.
    13. Sergio Cesaratto, 2013. "Harmonic and Conflict Views in International Economic Relations: a Sraffian View," Palgrave Macmillan Books, in: Enrico Sergio Levrero & Antonella Palumbo & Antonella Stirati (ed.), Sraffa and the Reconstruction of Economic Theory: Volume Two, chapter 10, pages 242-264, Palgrave Macmillan.
    14. Sergio Cesaratto, 2002. "The Economics of Pensions: A non-conventional approach," Review of Political Economy, Taylor & Francis Journals, vol. 14(2), pages 149-177.
    15. Sasaki, Hiroaki, 2010. "Endogenous technological change, income distribution, and unemployment with inter-class conflict," Structural Change and Economic Dynamics, Elsevier, vol. 21(2), pages 123-134, May.
    16. Eckhard Hein, 2005. "Money, Interest, and Capital Accumulation in Karl Marx’s," Method and Hist of Econ Thought 0501002, University Library of Munich, Germany.
    17. Matias Vernengo, 2003. "Balance of Payments Constraint and Inflation," Working Paper Series, Department of Economics, University of Utah 2003_06, University of Utah, Department of Economics.
    18. Hein, Eckhard, 2002. "Money, interest, and capital accumulation in Karl Marx's economics: A monetary interpretation," WSI Working Papers 102, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    19. Nah, Won Jun & Lavoie, Marc, 2019. "The role of autonomous demand growth in a neo-Kaleckian conflicting-claims framework’," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 427-444.
    20. Sasaki, Hiroaki, 2018. "タイトル：カレツキアン・モデルの基本骨格――短期モデルと長期モデル―― [The Basic Framework of the Kaleckian Model of Growth and Distribution: Short-run Model and Long-run Model]," MPRA Paper 88986, University Library of Munich, Germany.

    More about this item

    Keywords

    endogenous money; money non-neutrality; long period unemployment;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    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:uts:wpaper:153. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Duncan Ford (email available below). General contact details of provider: https://edirc.repec.org/data/sfutsau.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.