“…The main source of inspiration in this research is the new institutionalist political economy with its neoclassical origins, which highlights higher political instability and uncertainty (Alesina and Perotti, 1996); increased risk of popular support for redistribution and higher capital taxes with negative consequences for investment (Alesina and Rodrik, 1994;Persson and Tabellini, 1994); and the negative effects of credit market imperfections on human capital accumulation (Galor and Zeira, 1993). Most recently, a study by the IMF (Decressin et al, 2015) has also analysed the impact of a simultaneous decline in wages in all the Eurozone countries, and finds a negative effect on the GDP of the Eurozone as a whole; thus confirming one of the core results in the Post-Kaleckian literature (Onaran and Obst, 2015): A simultaneous decline in the wage share in all EU15 countries eliminates the positive competitiveness effects on net exports, and leads to overall negative impact on growth.…”