Wage led aggregate demand in the United Kingdom

Jump, Robert Calvert; Mendieta‐Muñoz, Ivan

doi:10.1080/02692171.2016.1271976

Cited by 17 publications

(7 citation statements)

References 32 publications

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“…In their interpretation, this suggests that the increase in income inequality made the USA economy a more profit-led economy, and the main result of Barbosa-Filho and Taylor (2006) is due to the high-inequality level after 1981. Jump and Mendieta-Muñoz (2017) tested the wage-led aggregate demand hypothesis for the UK for the 1971-2007 period using quarterly data. The authors used a traditional VAR approach to focus solely on short-term changes in the functional income distribution, and employed an identification strategy based on shocks to real earnings, which was interpreted as bargaining power shocks.…”

Section: International Literaturementioning

confidence: 99%

An empirical test of the Post-Keynesian growth model applied to functional income distribution and the growth regime in Brazil

Jesus

Araújo

Drumond

2017

International Review of Applied Economics

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The main purpose of this paper is to empirically investigate whether, between 1970 and 2008, the Brazilian economy was profit-led or wage-led. To this end, we approach a canonical post-Keynesian growth model (PKGM) to estimate certain vector autoregressive (VAR) models and perform Granger non-causality tests. Three main results are extracted from the generalized impulse-response functions provided by the VAR models. First, a positive profit-share innovation affects economic growth and capacity utilization rate, both in the same direction, suggesting a profit-led pattern. Second, a profit share shock positively affects both the ratio actual/potential output, and capital accumulation, reinforcing the previous result. Third, a capacity utilization shock is shown to positively affect both output growth and capital accumulation via the accelerator effect. On the one hand, the pairwise Granger non-causality test does not provide any evidence of causality running from profit share to economic growth or capacity utilization. On the other hand, there is some evidence of Granger causality running from profit share to capital accumulation. JEL CLASSIFICATION e12; e25; o40 ARTICLE HISTORY

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Section: International Literaturementioning

confidence: 99%

An empirical test of the Post-Keynesian growth model applied to functional income distribution and the growth regime in Brazil

Jesus

Araújo

Drumond

2017

International Review of Applied Economics

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“…Our study thus needs to be complemented with a systems approach that allows for an endogenous determination of the wage share (e.g. Stockhammer and Onaran 2004;Jump and Mendieta-Munoz 2017). However, this is outside the scope of the present paper.…”

Section: Wages Factor Shares and Economic Growth: An Analytical Frameworkmentioning

confidence: 99%

Wages, Income Distribution and Economic Growth: Long-Run Perspectives in Scandinavia, 1900–2010

Bengtsson

Stockhammer

2021

Review of Political Economy

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This article views analysis of the influence of capital-labour income distribution on economic growth from a historical perspective, using data from 1900 onwards. We study the three Scandinavian countries of Sweden, Denmark and Norway, where conventional accounts of the postwar growth miracles in these small, open economies have emphasized the role of wage restraint, favouring profits and investment over consumption. Instead, we show that the 1950s and 1960s saw growing wage shares, and use the Bhaduri-Marglin model to econometrically analyse the effects on consumption, investment, exports and imports and the total effects on GDP. Furthermore, we estimate the effects of wage pressure on labour productivity. Growing wage shares have had a small positive effect on GDP growth in Sweden, Denmark and Norway, and the positive effect was larger in the postwar period than in other times. However, the positive growth effects of wage pressure were modest as the demand was only weakly wage-led. In contrast, supply side effects were large. Labour productivity was stimulated by vigorous wage increases, as argued by the Swedish Rehn-Meidner model as well as by post-Keynesian economists. The present investigation opens several further avenues for research on the distribution-growth nexus.

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“…Previously, a pattern between estimation strategy and findings had been noted, with behavioural equations more likely to find wage-led and reduced-form equations more inclined to report profit-led demand regimes. However, Jump and Mendieta-Muñoz (2017) and Blecker et al (2020) estimate systems estimators that report wage-led demand regimes for the UK and the USA respectively. Blecker at al.…”

Section: Related Empirical Literaturementioning

confidence: 99%

Distribution, wealth and demand regimes in historical perspective: the USA, the UK, France and Germany, 1855–2010

Stockhammer

Reddy

2021

Review of Keynesian Economics

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Most empirical macroeconomic research is limited to the period since World War II. This paper analyses the effects of changes in income distribution and in private wealth on consumption and investment covering a period from as early as 1855 through to 2010 for the UK, France, Germany and the USA, based on the data set of Piketty and Zucman (2014). We contribute to the study of wealth effects, of financialization, and of the nature of demand regimes. We find that overall domestic demand has been wage-led in the USA, the UK and Germany. Total investment responds positively to higher wage shares, which is driven by residential investment. For corporate investment alone, we find a negative relation. Wealth effects are found to be positive and significant for consumption in the USA and the UK, but weaker in France and Germany. Investment is negatively affected by private wealth in the USA and the UK, but positively in France and Germany.

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Wage led aggregate demand in the United Kingdom

Cited by 17 publications

References 32 publications

An empirical test of the Post-Keynesian growth model applied to functional income distribution and the growth regime in Brazil

An empirical test of the Post-Keynesian growth model applied to functional income distribution and the growth regime in Brazil

Wages, Income Distribution and Economic Growth: Long-Run Perspectives in Scandinavia, 1900–2010

Distribution, wealth and demand regimes in historical perspective: the USA, the UK, France and Germany, 1855–2010

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