Inflation Targeting, Cost Inflation, Growth and Distribution

Year 2009, Volume: 64 Issue: 04, 77 - 100, 01.04.2009

Ayşe Özden Birkan

https://doi.org/10.1501/SBFder_0000002141

Abstract

This paper develops a one-sector Kaleckian model of an import dependent indebted small open economy where the mark up rate is sensitive to both changes in the interest rate and the exchange rate and foreigners provide part of the long term finance. The short and long run consequences of an inflation targeting policy in the form of high interest rates and strong domestic currency are examined. Among the possible short run scenarios, the one most relevant for developing countries foresers a decline in the profit rate, the capacity utilization rate and the rate of accumulation as well as the employment rate and the real wage. Leverage ratio of the firms and the extent of external indebtedness play an important role in bringing about this result. Long
run analysis reveals that this scenario is associated with stability in the long run and that, in the long run, the extent of foreign indebtedness and the responsiveness of capital inflows to the return on existing portfolios determines the direction of the effects of inflation targeting on the equilibrium leverage ratio.

Keywords

Inflation targeting, Kaleckian model, debt, flexible mark up rate, interest rate

ENFLASYON HEDEFLEMESİ, MALİYET ENFLASYONU, BİRİKİM VE DÖNÜŞÜM

Abstract

Bu çalışmada üretimde ithal girdi kullanan, uluslararası ticarete açık, borçlu ve küçük bir ekonomi için tek sektörlü Kalecki tipi bir model geliştirilmiştir. Modelde maliyet eki (mark up) oranının faiz oranı ve döviz kurundaki değişikliklere hassasiyet göstermesinin yanı sıra yerli firmalara yabancılar tarafından uzun dönemli finansman sağlanmaktadır. Geliştirilen model çerçevesinde yüksek faiz oranı ve yerli para biriminin güçlenmesiyle temsil edilen enflasyon hedeflemesi politikasının kısa ve uzun dönem ekonomik denge değerlerine olan etkisi incelenmektedir. Olası senaryolardan gelişmekte olan ülkeler için en geçerli olanı kısa dönemde, kâr oranı, kapasite kullanım oranı ve sermaye birikim hızında, miktarı model parametreleriyle belirlenen bir düşüş öngörmektedir. Firmaların borç-sermaye oranının ve dış borçların toplam borç içindeki payının bu sonucun ortaya çıkmasında önemli rol oynadığı görülmektedir. Borç-sermaye oranının sabitlenmesiyle tanımlanan uzun dönemde denge çözümlemesi enflasyon hedeflemesi politikasının kısa dönemli daraltıcı etkilerinin uzun dönemli dengesizlikleri de beraberinde getirebileceğine işaret etmektedir.

Keywords

Enflasyon hedeflemesi, Kalecki tipi model, s nai borç, esnek maliyet eki (markup) oran , faiz oran

References

• AGENOR, Pierre-Richard (2000), “Monetary Policy under Flexible Exchange Rates: An Introduction to Inflation Targeting,” World Bank Policy Research Working Paper, 2511.
• AKYÜZ, Y×lmaz (2007), “Global Rules and Markets: Constraints over Policy Autonomy in Developing Countries,” Āktisat, ĀĂletme ve Finans, 22/257: 5-43.
• AKYÜZ, Y×lmaz (2004), “Managing Financial Instability and Shocks,” Türkiye Ekonomi Kurumu Tart×Ăma Metinleri, 2004/11.
• AMADEO, Edward J./ DUTT, Amitava K. (1991), “A Post Keynesian Theory of Growth, Interest and Money,” PUC/RJ Department of Economics Discussion Paper, 264.
• ANGERIZ, Alvaro/ARESTIS, Philip (2008), “Assessing Inflation Targeting Though Intervention Analysis,” Oxford Economic Papers, 60/2: 293-317.
• ANGERIZ, Alvaro/ARESTIS, Philip (2007), “Assessing the performance of Inflation Targeting Lite Countries,” The World Economy, 30/11: 1621-45.
• ANGERIZ, Alvaro/ARESTIS, Philip (2006), “Has inflation targeting had any impact on inflation,” Journal of Post Keynesian Economics, 28/4: 559-571.
• ANGERIZ, Alvaro/ARESTIS, Philip (2005), “An Empirical Investigation of Inflation Targeting in Emerging Economies,” Cambridge Centre for Economic and Public Policy Working Paper, 1105.
• ARESTIS, Philip/SAWYER, Malcolm (2003), “Inflation Targeting: A Critical Appraisal,” The Levy Economics Institute Working Paper, Say×: 388.
• ARESTIS, Philip/SAWYER, Malcolm (2006), “The nature and role of monetary policy when money is endogenous,” Cambridge Journal of Economics, 30/6: 847-860.
• ARGITIS, George/PITELIS, Christos (2001), “Monetary policy and the distribution of income: evidence for the United States and the United Kingdom,” Journal of Post Keynesian Economics, 23/4: 617-637.
• BALL, Laurence/ SHERIDAN, Niamh (2004), “Does Inflation targeting Matter?,” NBER Working Paper Series, 9577.
• BLECKER, Robert A. (1998), “Kaleckian Macromodels for Open Economies”, DEPREZ, J./HARVEY, J.T. (eds.), Foundations of International Economics: Post Keynesian Perspectives (Florence, USA: Routledge): 116-150.
• BLECKER, Robert A. (1989), “International Competition, Income Distribution and Economic Growth,” Cambridge Journal of Economics, 13/3: 395-412.
• DUTT, Amitava K. (1990), “Interest Rate Policy in LCDs: a Post Keynesian View,” Journal of Post Keynesian Economics, 13/2: 210-232.
• EPSTEIN, Gerald (2003), “Alternatives to Inflation Targeting, Monetary Policy for Stable and Egalitarian Growth: A Brief Research Summary,” PERI Working Paper Series, 62.
• FITZGERALD, Edmund Valpy Knox (2005), “Monetary Models and inflation targeting in emerging market economies,” ARESTIS, P./BADDELET, M./MCCOMBIE J. (eds.), The New Monetary Policy (Massachusetts: Edward Elgar): 204-223.
• FRENKEL, Roberto/TAYLOR, Lance (2006), “Real Exchange Rate, Monetary Policy and Employment,” UNDESA Working Paper,19.
• GANDOLFO, Giancarlo (1996), Economic Dynamics (New York: Springer).
• HEIN, Eckhard (2007), “Interest Rate, Debt, Distribution and Capital Accumulation in a PostKaleckian Model,” Metroeconomica, 58/2: 310-339.
• HEIN, Eckhard (2006), “Interest, Debt and Capital Accumulation-A Kaleckian Approach,” International Review of Applied Economics, 20/3: 337-352.
• HONDA, Yuzo (2000), “Some tests on the effects of inflation targeting in New Zealand, Canada and the UK,” Economics Letters, 66/1: 1-6.
• LAVOIE, Marc/KRIESLER, Peter (2007), “Capacity Utilization, Inflation, and Monetary Policy: The Duménil and Lévy Macro Model and the New Keynesian Consensus,” Review of Radical Political Economics, 39/4: 586-598.
• LAVOIE, Marc (2006), “A Post Keynesian Amendment to the New Consensus on Monetary Policy,” Metroeconomica, 57/2: 165-192.
• LAVOIE, Marc (2004), “The New Consensus on Monetary Policy Seen from a Post Keynesian Persective” LAVOIE, M./SECCARECCIA, M. (eds.), Central Banking in the Modern World Alternative Perspectives (Massachusetts: Edward Elgar): 15-34.
• LAVOIE, Marc (1995), “Interest Rates in Post Keynesian Models of Growth and Distribution,” Metroeconomics, 46/2: 146-177.
• LAVOIE, Marc (1992), Foundations of Post Keynesian Economic Analysis (Vermont: Edward Elgar).
• LIMA, Gilberto Tadeu/SETTREFIELD, Mark (2008), “Inflation targeting and Macroeconomic Stability in a Post Keynesian Economy,” Journal of Post Keynesian Economics, 30/3: 435-461.
• OCAMPO, Jose Antonio (2003), “Developing countries’ anti-cyclical Policies in a Globalized World,” DUTT, A.K./ROS, J. (eds.), Development Economics and Structuralist Macroeconomics (Massachusetts: Edward Elgar): 374-405.
• ROCHON, Louis Philippe/ROSSI, Sergio (2006), “Inflation Targeting, Economic Performance, and Income Distribution: A Monetary Macroeconomics Analysis,” Journal of Post Keynesian Economics, 28/4: 615-638.
• ROWTHORN, Robert E. (1977), “Conflict, Inflation and Money,” Cambridge Journal of Economics, 1/3: 215-239.
• SARANTIS, Nicholas (1990), “Distribution and Terms of Trade Dynamics, Inflation and Growth,” Journal of Post Keynesian Economics, 13/2: 175-198.
• SETTERFIELD, Mark (2006), “Is Inflation Targeting Compatible with Post Keynesian Economics?,” Journal of Post Keynesian Economics, 28/ 4: 653-671.
• SETTERFIELD, Mark (2004), “Central Banking, Stability and Macroeconomic Outcomes: A Comparison of New Consensus and Post Keynesian Monetary Macroeconomics,” LAVOIE, M./SECCARECCIA, M. (eds.), Central Banking in the Modern World: Alternative Perspectives (Massachusetts: Edward Elgar): 35-56.
• TAYLOR, Lance (2004), Reconstructing Macroeconomics (Massachusetts: Harvard University Press).