The Role of Monetary Policy in the Functional Income Distribution and Economic Growth in a Money Manager Capitalist System: The Case of United States of America: 1970 - 2015

Abstract

The present dissertation analyzes the impact of monetary policy on the functional distribution of income, focusing on the United States as a case study. It explores how monetary policies negatively impact labor share in the context of Money Manager Capitalism. The dissertation brings back Hyman Minsky's acuities on the monetary policy transmission through the capital market route, his "two-price" theory of investment, and Thorstein Veblen's q-ratio as crucial elements to understand monetary policy transmission through the capital market route and the changes of the functional distribution of income under Money Manager Capitalism. The first chapter presents a historical review of the institutional framework in the United States using the French régulation school's analytical lens. The chapter also presents Modern Money Theory's insights that help understand how monetary policy works, accompanied by a description of Minsky's capital market route in the context of the Modern Manager Capitalism regime. The second chapter shows the stylized facts related to the functional distribution of income and the relationship of this issue with monetary policy, reviewing heterodox theories of income distribution and rules for monetary policy and investment behavior. It presents a theoretical explanation of how monetary policy under Money Manager Capitalism negatively impacts the functional distribution of income if the interest rate is different from zero and why the capital market route is a powerful channel for the transmission of monetary policy. The last chapter offers a stock-flow consistent model that incorporates the theoretical approaches presented in the previous chapters and its discursive solution.