Endogenous fluctuations in demand and distribution: An empirical investigation

Barrales‐Ruiz, Jose; Arnim, Rudiger von

doi:10.1016/j.strueco.2021.05.005

Cited by 9 publications

(4 citation statements)

References 38 publications

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“…500 and 504, respectively), and moreover that a higher Gini coefficient strengthens both effects. Utilizing machine learning methods, Barrales and von Arnim (2020) investigate whether U.S. post‐war data support the existence of an endogenous distributive cycle in activity and labor share, and conclude with a qualified yes.…”

Section: Evidencementioning

confidence: 99%

The distributive cycle: Evidence and current debates

Barrales‐Ruiz

Mendieta‐Muñoz

Rada

et al. 2021

Journal of Economic Surveys

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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.

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Section: Evidencementioning

confidence: 99%

The distributive cycle: Evidence and current debates

Barrales‐Ruiz

Mendieta‐Muñoz

Rada

et al. 2021

Journal of Economic Surveys

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“…Accordingly, we set the cut off periodicity at a conservative 64 quarter, that is, any fluctuation beyond that is considered as trend. While this extends beyond standard definitions of the business cycle, recent literature has highlighted the fact that an important frequency peak for economic activity and labor share occurs around 40 quarters (Barrales‐Ruiz and von Arnim, 2021). Further, Barrales‐Ruiz et al.…”

Section: Results For the Post‐war Us Economymentioning

confidence: 96%

“…Third, the method applied here places emphasis on the cyclical nature of the interaction between key macroeconomic variables. With this, we contribute to a resurgence in interest in this area (Barrales‐Ruiz & von Arnim, 2017, 2021; Beaudry et al., 2020; Strohsal et al., 2019). Transformation of vector autoregression results into the frequency domain facilitates the assessment and visualization of causality across the relevant frequency range—from the very short run to the medium run of about 16 years.…”

Section: Discussionmentioning

confidence: 94%

“…How to measure the functional income distribution is not trivial and depends on several important assumptions such as sector coverage and proprietor's income apportion. These issues have been discussed at length in the literature (Barrales‐Ruiz et al., 2022; Barrales‐Ruiz and von Arnim, 2021; Gomme & Rupert, 2004; Mućk et al., 2018). As is well‐known, the choice of labor share measure is most important for analysis of underlying trends, rather than cycles.…”

Section: Results For the Post‐war Us Economymentioning

confidence: 99%

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Income distribution and economic activity: A frequency domain causal exploration

2022

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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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