A year after the publication of Kalecki’s article, in 1956, Kaldor visited Santiago as a consultant to ECLA, commissioned to undertake a study of Chile’s economic problems. In his 1959 paper, which was also initially published in Mexico, Kaldor attributed many of Chile’s problems to over-regulation of the economy, but also restated Kalecki’s argument more formally: if productivity rises in nonagricultural sectors, but not in agriculture, then assuming that demand for food depends purely on the level of real wages and is inelastic with respect to the relative prices of food and non-food items, an expansion of money supply in step with rising GDP would raise money wages and ‘the rise in money wages would cause, by a series of steps, a sufficient rise in food prices (relative to both wages and non-food prices) to offset entirely the increase in real earnings in terms of non-food items’.

According to the text, Kaldor:

Item 4 - makes a two-sector analysis to explain structural disequilibrium.