Monetary Policy and Inequality

The Pasinetti Index

Sylvio Antonio Kappes, Louis-Philippe Rochon

• Publisher: Routledge
• Year: 2025
• eBook ISBN: 9781040768747
• Topic: Economics
• Subtopic: Business General
• Index: Economics

This book explores the relationship between monetary policy and income (and wealth) distribution, a growing area of research in post-Keynesian and heterodox economics today. The interest actually goes back at least to Keynes, who, in his A Tract on Monetary Reform, discusses the effects of interest rates on income distribution—what has been called a 'rentier-first' monetary policy. This led Keynes, in the General Theory, to advocate for what he calls 'the euthanasia of the rentier.' For Keynes, monetary policy should be set at a low enough rate of interest as to maximize our collective ability to attain full employment. Joan Robinson further developed these ideas in her Accumulation of Capital (1956), examining the distributive nature of interest rates.

Within contemporary heterodox economics, this topic gained renewed attention in the late 1980s through influential papers by prominent post-Keynesians who highlighted concerns about how interest rate changes affect functional income distribution. This perspective places social class dynamics and class conflict at the center of monetary policy debates, challenging mainstream approaches that often overlook distributional consequences.

This book is an invaluable read for economics researchers, graduate students, and policy analysts of monetary theory, macroeconomics, political economy, income inequality, financial economics, and heterodox economic approaches.

The chapters in this book were originally published in Review of Political Economy.

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Citation Information
• Notes on Contributors
• Introduction – Monetary Policy and Income Distribution: The Pasinetti Index
• 1 Where Do the Pasinetti Rule and the Pasinetti Index Come From?
• 2 Distributional Regimes in the US — The Pasinetti Index and the Monetary Policy Effects on Income Distribution
• 3 Monetary Policy and the Pasinetti Index: A Stock Flow Model for Latin American Economies
• 4 Revisiting the Pasinetti Index: Understanding Its Cyclical and Long-Term Features and Its Important Implications for Macroeconomic Policy
• 5 The Distributive Impact of Unconventional Monetary Policies: Old and New
• 6 The Pasinetti Index and the Rise of Inequality in the Age of Unconventional Monetary Policy in Japan
• 7 Monetary Policy and Income Distribution: Some Reflections on the Pasinetti Rule
• Index