This paper surveys current debates on the distributive cycle. The literature builds on R.M. Goodwin' s seminal 1967 chapter titled " A growth cycle." We review theoretical motivations for the distributive cycle, which, despite signif-icant differences, all imply that macroeconomic activity leads the labor share in a counter-clockwise cycle in the activity-labor share plane. Subsequently, we summarize and update evidence on the existence of a distributive cycle, with a focus on the post-war US macroeconomy. We analyze activity and labor share series and their interaction in the frequency domain, and also employ stan-dard vector autoregressions. Results confirm the distributive cycle for the US post-war period. We contextualize results vis-à-vis current debates: (1) we consider a financial cycle, to rebut the theoretical possibility of " pseudo-Goodwin" cycles, (2) demonstrate that a suppressed labor share and stagnation are com-patible with short run Goodwin cycles, and argue that this link presents the way forward for research on secular stagnation.
This paper investigates the role of the COVID-19 pandemic in oil markets, focusing on the great oil price crash in April 2020. Using a 5-variable structural vector autoregression (SVAR) model, the study identifies an oil price shock arising from the pandemic together with supply, demand, and financial market shocks to global oil markets. The results show that a pandemic shock causes a delayed decrease in oil prices. Moreover, financial market conditions that affect financial investment decisions play a significant role in oil price movements. The study also computes the forecast error variance decomposition and finds that the impact of a pandemic shock, financial speculation shock, and aggregate demand shock are crucial in the short run. The findings offer new opportunities for applications in energy research.
This paper contributes to the empirical literature on the Goodwin pattern. Building on the frequency domain representation of SVAR models, we calculate the extended partial directed coherence. This measure captures the contemporaneous effect from labor share onto economic activity. We illustrate the method with simulated data. Results for two-dimensional models with quarterly US data (1947Q1-2020Q1) between activity proxies (employment rate and output gap) and labor share indicate causal bi-directional relationships for short and medium run. We estimate an extended model in employment rate, output gap, and labor share, and sub-samples describing golden age and great moderation separately. Results indicate that the mechanisms underlying the Goodwin pattern have weakened in recent decades.
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