The Simple Post-Keynesian Monetary Policy Model
An Open Economy Approach
Bibliographic Data
| ID | 12229452 |
|---|---|
| Authors | Leonardo Vera (0000-0002-5390-6397, Central University of Venezuela, corresponding author) |
| Year | 2014 |
| Volume | 26 |
| Issue | 4 |
| Pages | 526-548 |
| Publication date | 2014-10-02 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Review of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0953-8259 • E-ISSN: 1465-3982 |
| Publisher | Taylor & Francis (PUBLISHER • GB) |
| DOI | 10.1080/09538259.2014.969547 |
| OpenAlex | W2017477034 |
| Language | EN |
| Citations received | 4 |
| References cited | 29 |
Monetary policy with an inflation targeting rule is analyzed through a simple small-scale Post-Keynesian model that incorporates open economy issues. In contrast with previous Post-Keynesian attempts, the model embodies policy authorities that are committed not only to hitting inflation and/or output targets, but also to the achievement of the external balance. To take account of the external balance objective, we model the real exchange rate as an endogenous and moving target, with the nominal exchange rate being the instrument of that target. The model shows that in response to an adverse external shock the central bank has to consider first the required real exchange rate adjustment that will preserve the external balance, and secondly the level at which the interest rate must be set in order to maintain inflation stabilization. Keeping inflation to target requires higher interest rates and strong reliance on the unemployment channel which, under certain circumstances, also has adverse side effects on income distribution. We show that to deal with an exogenous external shock a policy mix of real exchange rate targeting and income distribution targeting outperforms inflation targeting
Economics · Exchange rate · Inflation (cosmology · Inflation targeting · Interest rate · Keynesian economics · Macroeconomics · Monetary economics · Monetary policy · New Keynesian economics · Open economy · Real interest rate · Shock (circulatory · Small open economy · Economic theories and models · Economic Theory and Policy · Monetary Policy and Economic Impact
Social corporatism
Discretion versus policy rules in practice
Capital Inflows and Real Exchange Rate Appreciation in Latin America
Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model
The New Consensus on Monetary Policy and its Post-Keynesian Critique
Balancing the Macroeconomic Books on the Backs of Workers
Inflation Targeting and Real Exchange Rates in Emerging Markets
Growth, Distribution, and Uneven Development
| Unique citing works | 4 |
|---|---|
| Citations per year | 0.57 |
| Citation span | 2019 - 2024 (6) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 4 |