A Short Period Sraffa-Keynes Model for the Evaluation of Monetary Policy
Bibliographic Data
| ID | 12230000 |
|---|---|
| Authors | Peter Docherty (0000-0002-9975-6435, University of Technology Sydney, corresponding author) |
| Year | 2024 |
| Volume | 38 |
| Issue | 1 |
| Pages | 317-346 |
| Publication date | 2024-01-15 |
| 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 | 10.1080/09538259.2023.2291410 |
| OpenAlex | W3131768941 |
| Language | EN |
| Citations received | 1 |
| References cited | 36 |
This paper develops a short period, one sector, Sraffa-Keynes model that can be used for the evaluation of various recommendations outlined in the Post Keynesian monetary policy literature. The model is characterised by the principle of effective demand, Sraffa or target-return pricing (which integrates the determination of key distributive variables and allows for short run cyclical variation in prices), conflict inflation, endogenous money, and a basic approach to monetary policy in the Smithinï¿1⁄2Wray tradition of fixing the policy rate to achieve low or specified rates of unemployment. The paper argues that nominal interest rates are the appropriate target for monetary policy rather than real rates given the need to determine appropriate rates of return on capital and the good approximation that nominal rates are for the particular specification that real rates take in the model. A number of key results arise from model simulations: after experiencing two standard macroeconomic shocks, the model returns to a long period equilibrium characterised by the achievement of the target rate of return, desired capacity utilisation, and Sraffian prices of production. Monetary policy is also shown to operate through the typical Post Keynesian transmission mechanism of changes to income distribution. Flexible prices (where firms modify prices to cover the additional costs of running the capital stock at other than full capacity) are lastly shown to have similar effects on activity to monetary policy. Suggestions are made for further work which applies the model to the evaluation of counter-cyclical monetary policy, a comparison of fiscal and monetary policy responses to economic shocks, and which extends the model to a multi-sector context
Econometrics · Economics · Interest rate · Keynesian economics · Macroeconomics · Monetary economics · Monetary policy · New Keynesian economics · Post-Keynesian economics · Recession · Shock (circulatory · Volatility (finance · Economic theories and models · Economic Theory and Policy · Political Economy and Marxism
The general theory of employment, interest, and money
Capital in the Twenty-First Century
The Role of Monetary Policy
Theory of Production
Lectures on the Theory of Production
Kaleckian Effective Demand and Sraffian Normal Prices
Overhead Labour Costs in a Neo-Kaleckian Growth Model with Autonomous Non-Capacity Creating Expenditures
Technical Change, Effective Demand and Employment
Disequilibrium Pricing and the Sraffa—Keynes Synthesis
Growth Rate and Level Effects, the Stability of the Adjustment of Capacity to Demand and the Sraffian Supermultiplier
The Short Period and the Long Period in Macroeconomics
Sraffian research programmes and unorthodox economics
From post-Keynesian to historical price theory, part I
The Political Economy of Interest-Rate Setting, Inflation, and Income Distribution
Long Period Effective Demand and the Sraffian Supermultiplier
Alternative Theories of Distribution
A Statistical Theory of Expenditures in Capital Maintenance and Repair
The History of the Phillips Curve
Estimating a Wage Curve for Britain 1973-90
Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory
How the World Achieved Consensus on Monetary Policy
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,5 |
| Citation span | 2024 - 2024 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |