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WAGE POLICY IN AN OPEN‐ECONOMY KALECKI–KALDOR MODEL: A SIMULATION STUDY
Author(s) -
von Arnim Rudiger
Publication year - 2011
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2010.04088.x
Subject(s) - economics , wage , productivity , open economy , new keynesian economics , small open economy , efficiency wage , investment (military) , post keynesian economics , macroeconomics , labour economics , monetary policy , exchange rate , politics , political science , law
This paper discusses a Post‐Keynesian model of income, production and trade. The one‐country, one‐sector model features Kaleckian investment demand, Kaldorian productivity and a labor market module based on a wage–price spiral. The model is first presented for a closed economy with exogenous real wages; second, for a closed economy with endogenous real wages; third, for an economy open to trade with endogenous real wages. Simulations with different calibrations show key characteristics of the model. Monte Carlo simulations over reasonable parameter ranges shed some light on the effectiveness of wage policies in open economies.