Emulation, indebtedness and income distribution: A monetary theory of production approach

Guglielmo Forges Davanzati, Andrea Pacella
2010 European Journal of Economics and Economic Policies: Intervention  
Th e aim of this paper is to study the eff ect of emulation within a basic schema of the monetary theory of production (MTP). A theoretical model is presented, where workers set their target level of consumption based on the comparison with other workers taken as reference. It is shown that emulation can play a crucial role in increasing workers' propensity to indebtedness. As a result, profi ts increase and so does the price level, thus generating a decline of the real wage. Moreover, the
more » ... Moreover, the existence of indebtedness can provide a further solution to the socalled »paradox of profi ts« within the MTP. JEL classifi cations: D71, E12, E21, J31
doi:10.4337/ejeep.2010.01.12 fatcat:zgoidby3xzftflf4smcyxkkgdi