Work

Endogenous Banking Markup, Distributional Conflict and Capacity Utilization

Year: 2003

Type: article

Abstract: We develop a post‐Keynesian macrodynamic model of productive capacity utilization and income distribution in which the supply of credit‐money is endogenous. Nominal interest rate is set by banks as a markup over the base rate, which is exogenously determined by the monetary authority. Over time, banking markup falls with firms’ profit rate on physical capital and rises with the rate of inflation, whereas the base rate remains unchanged. The dynamic behaviour of the system is analysed for both cases regarding capacity utilization, namely full utilization and excess capacity, which then makes for the possibility of multiple equilibria for the state variables real wage and nominal interest rate.

Source: Metroeconomica

DOI: 10.1111/1467-999x.00171

Authors: Gilberto Tadeu Lima, Antonio J. A. Meirelles

Institutions: Universidade de São Paulo, Universidade Estadual de Campinas (UNICAMP)

Language: English

Topic: Economic Theory and Policy

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W2072827491

FWCI: 5.417

Cites: 14

Cited by: 19

Related to: 10