Pushing on a String: Monetary Policy, Growth Models and the Persistence of Low Inflation in Advanced Capitalism

Doorslaer, Hielke Van; Vermeiren, Mattias

doi:10.1080/13563467.2020.1858774

Cited by 19 publications

(3 citation statements)

References 62 publications

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“…Allen and Geels [5] in this respect explained the decoupling of monetary policy and inflation by an increased propensity to save and increased labor supply caused by globalization. Similar results were received by Van Doorslaer and Vermeiren [6].…”

Section: Introductionsupporting

confidence: 89%

Soft monetary policy in a sustainable economy as a rigid game

Čábelková

2021

E3S Web Conf.

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Over the past decade, central banks in a majority of developed countries injected astonishing amounts of money into national and international economies in the hope of helping real sectors and with worries of high inflation. Neither of these came true. This paper describes the reasons for such unusual dynamics using a case of the sustainable economy. The three factors considered include the increased propensity to save, the decreased money multiplier, and substantial growth in the financial markets. The mathematical model studies the effect of the new money created on the real sector via the effect on real consumption depending on the share of the new money received by the less and more affluent part of the population. The results suggest, that the higher is the proportion of new money allocated to the poorer part of the society, the higher is the effect of overall money on the real sector if the propensity to consume in this part of the population is held constant.

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Section: Introductionsupporting

confidence: 89%

Soft monetary policy in a sustainable economy as a rigid game

Čábelková

2021

E3S Web Conf.

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“…17 An acceleration in growth of aggregate demand leads to lower unemployment rates, thereby enhancing workers' bargaining power and increasing the average rate of growth of money wages (which, in turn, will be associated with a higher rate of inflation). 18 By affecting growth and employment, macroeconomic policies interact with wage bargaining and income distribution (Doorslaer and Vermeiren, 2021).…”

Section: Cpe Through the Lenses Of The Sraffian Supermultipliermentioning

confidence: 99%

Growth Theory and the Growth Model Perspective: Insights from the Supermultiplier

Morlin

Passos

Pariboni

2022

Review of Political Economy

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Recently, demand-led growth theories reshaped the study of comparative political economy. Since the Baccaro and Pontusson critique of Varieties of Capitalism, a new wave of studies has sought to analyze national economies in terms of their main demand driver of growth. Post-Keynesian authors provided extensions to perfect the fit between demand-led growth theories and comparative political economy. We argue that the Sraffian supermultiplier provides a growth theory compatible with the growth model perspective advanced by Baccaro and Pontusson and has advantages over Kaleckian and New Keynesian approaches. The concept of the autonomous components of demand, which comprise government spending, export, and debt-financed consumption, is already central for the studies of growth models. The supermultiplier provides a theory that coherently understands the relation between the autonomous demand drivers and the other induced components of demand. We demonstrate our arguments by decomposing the growth of four advanced economies: the United States, Germany, Japan, and Sweden. The decomposition shows the importance of separating the autonomous from the induced components and highlights the relevance of public expenditures and exports as growth drivers in advanced economies.

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“…Previous research has examined a lot of issues related to the persistence of inflation in a region or country. Where the results of the study some relate it to economic variables that are variables in measuring the level of persistence of inflation, such as exchange rate shocks (Bems, 2021;Dua, 2021), the way monetary policy is conducted (Bilici, 2020;Granville, 2019;Hakim et al, 2017;City & Lazaretou, 2011;Van Doorslaer &;Vermeiren, 2021), differences in regional layout (Gajewski, 2018), due to exchange rate regimes ( Caporale &;Gil-Alana, 2020;Wu, 2018), goods and services inflation (Boaretto, 2019), oil price shocks (Oloko, 2021 ;Salunkhe &;Patnaik, 2019), agricultural output in GDP (Duran, 2021), increased taxation progressivity (Geronikolaou et al, 2020), agricultural commodity prices (Tule et al, 2020), and unemployment rate (Albulescu &;Tiwari , 2018;Alogoskoufis, 2018;Ashley, 2020). Meanwhile, in this study, researchers will later use the Consumer Price Index (CPI) as a variable to see the level of persistence of inflation that occurs in Indonesia.…”

Section: Introductionmentioning

confidence: 99%

Autoregressive Vector (VAR) Method in Analyzing Inflation Persistence in Indonesia

Marlina,

Suriadi

2023

IJMRA

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One of the most important economic variables is inflation. It is known that some changes in each major variable in the economy are caused by the rate of inflation, such as unemployment and future economic conditions. This is what makes inflation a variable that is often observed and tested, both theoretically and empirically. Economic development is said to run well if supported by stable inflation values, which will later serve to make the population more prosperous in the future. This research is a quantitative research using secondary data, namely inflation and CPI data from January 2018 to December 2022. Data obtained from Bank Indonesia and the Indonesian Central Bureau of Statistics. This study aims to see persistence in Indonesia and see the effect of CPI on inflation both in the long and short term. Where the model used in this study is using the VAR model of differential levels, because the data is not stationary at the level level. Determination of the optimal lag length is obtained from the lowest Akaike Information Criterion (AIC) value. The results of the analysis show that the persistence of inflation in Indonesia is fairly high. This is because the lag value in inflation is close to 1 or even more, which is 6.71. The high persistence of inflation is expected to cause shocks that affect the inflation rate in Indonesia. Then the length of time it takes for inflation to return to the equilibrium position is about 1 year and a half or 18 months. Furthermore, for the effect of inflation on CPI, in this case it has an influence in the long run, while for the short term influence is only influenced by its own variables.

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Pushing on a String: Monetary Policy, Growth Models and the Persistence of Low Inflation in Advanced Capitalism

Cited by 19 publications

References 62 publications

Soft monetary policy in a sustainable economy as a rigid game

Soft monetary policy in a sustainable economy as a rigid game

Growth Theory and the Growth Model Perspective: Insights from the Supermultiplier

Autoregressive Vector (VAR) Method in Analyzing Inflation Persistence in Indonesia

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