A Kaleckian model of growth and distribution with conflict-inflation and Post Keynesian nominal interest rate rules

Abstract

Post Keynesians advocate two distinct approaches to monetary and interest rate policy. The activist approach sees interest rates moved countercyclically to ensure strong growth and low employment. The parking-it approach, however, favors setting real or nominal rates at specific levels and changing them only sparingly. In this paper, the authors evaluate the impact on macroeconomic performance of three variants of this latter approach—the Smithin rule, the Kansas City rule, and the Pasinetti rule.

Keywords:

• income distribution
• inflation
• interest rates
• monetary policy
• stabilization policy
• unemployment