FISCAL POLICY, CHARTAL MONEY, MARK-UP DYNAMICS AND UNEMPLOYMENT INSURANCE IN A MODEL OF GROWTH AND DISTRIBUTION

Given one parameter restriction, an output-stabilization rule for the provision of public services turns a Kaldor-Kalecki-Steindl growth model with unstable, catastrophe-prone dynamics into one with a stable limit cycle. In contrast, using a budget-balancing rule produces a saddle point, along with closed orbits near the boundaries of the state space. Adding Kaleckian mark-up dynamics destabilizes the equilibrium, with a spiraling path followed by a spin-out found in simulation. A final exercise establishes the possibility of adding a variable workforce and a public unemployment insurance system. Throughout, an identity governs the dynamics of the stocks of public financial liabilities.