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International Competition and Distributive Class Conflict in an Open Economy K aleckian Model
Author(s) -
Sasaki Hiroaki,
Sonoda Ryunosuke,
Fujita Shinya
Publication year - 2013
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/meca.12030
Subject(s) - economics , distributive property , competition (biology) , open economy , bargaining power , balance (ability) , aggregate demand , small open economy , balance of trade , exchange rate , microeconomics , monetary economics , international economics , monetary policy , medicine , ecology , mathematics , pure mathematics , physical medicine and rehabilitation , biology
This paper constructs an open economy K aleckian model in which international competition affects the bargaining process between firms and workers, and investigates the effects of such bargaining on the macroeconomy. We show that the effects of a change in the bargaining power on aggregate demand depends not only on the demand regimes but also on which agents bears more of the burden arising from the international price competition. Moreover, if the real exchange rate has a small impact on the trade balance, the economy is stable, whereas if it has a larger impact on the trade balance, the economy is unstable.