Wage-led versus profit-led demand regimes: the long and the short of it

Blecker, Robert A.

doi:10.4337/roke.2016.04.02

Cited by 132 publications

(169 citation statements)

References 105 publications

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“…Since the contribution from Bowles and Boyer (1995), a bourgeoning empirical research on the PKGM arouse, especially for advanced capitalist countries. As pointed out by Blecker (2016), two empirical strategies have been widely used to test the wage-led/profit-led hypothesis: the structural approach (or single-equation approach) and the aggregative approach (or system approach). The first strategy takes income distribution to be exogenous and is based on estimating separated equations for consumption, investment and net exports.…”

Section: Review Of the Empirical Literaturementioning

confidence: 99%

“…Focusing on the different effects that particular distributive setups have on particular components of aggregate demand, Blecker (2016) demonstrates that an increase in wages leading to a higher wage share has a two-sided effect on economic performance. On the one hand, it has a negative effect on domestic competitiveness, which may lower aggregate demand, due to its negative effect on net exports.…”

Section: Introductionmentioning

confidence: 99%

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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: Review Of the Empirical Literaturementioning

confidence: 99%

Section: Introductionmentioning

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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“…This is, perhaps, the simplest approach to the wage led aggregate demand hypothesis, although it runs counter to arguments made in Blecker (2014). While we are not averse to the proposition that income distribution effects operate at low frequencies, it seems likely that the best way to approach this problem empirically would be via cross-country growth regressions, or using long time series at annual frequencies.…”

Section: Introductionmentioning

confidence: 67%

“…One solution is to estimate a VAR in GDP and the labour share, assuming a reduced form specification, following the study of Barbosa-Filho and Taylor (2006) for the USA. In this case one can derive impulse response functions which roughly correspond to (9). Unfortunately, at this point, one faces an identification problem.…”

Section: The Wage Led Aggregate Demand Hypothesismentioning

confidence: 99%

Wage led aggregate demand in the United Kingdom

Jump

Mendieta‐Muñoz

2017

International Review of Applied Economics

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The wage led aggregate demand hypothesis is examined for the United Kingdom over the period 1971 -2007. Existing studies disagree on the aggregate demand regime for the UK, and this appears to be due to differing empirical approaches. Studies relying on equation-byequation estimation procedures tend to find support for wage led aggregate demand in the UK, while the single study using systems estimation finds no support for the hypothesis. In order to resolve this incongruity, we test the wage led aggregate demand hypothesis in the UK using VAR models estimated on quarterly data. We use a liberal partial identification strategy based on movements in real earnings rather than in the labour share. The results provide support for the wage led aggregate demand hypothesis during the period of study. Keywords AbstractThe wage led aggregate demand hypothesis is examined for the United Kingdom over the period 1971 -2007. Existing studies disagree on the aggregate demand regime for the UK, and this appears to be due to differing empirical approaches. Studies relying on equation-by-equation estimation procedures tend to find support for wage led aggregate demand in the UK, while the single study using systems estimation finds no support for the hypothesis. In order to resolve this incongruity, we test the wage led aggregate demand hypothesis in the UK using VAR models estimated on quarterly data. We use a liberal partial identification strategy based on movements in real earnings rather than in the labour share. The results provide support for the wage led aggregate demand hypothesis during the period of study.

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“…Este é uma mudança teórica que Kaldor realiza em relação ao seu artigo de 19551956, no qual a elevação do investimento, em um contexto de plena utilização da capacidade, é acomodada por uma elevação dos preços, reduzindo os salários reais e aumentando a margem de lucros. Contudo, como apontado por Blecker (2015), um regime liderado pela demanda também pode ser liderado pelos salários ou pelo lucro, e isso não é explicado por Kaldor em seu artigo de 1975. Assim, teoricamente, em um modelo liderado pela de manda é possível que o aumento na margem dos lucros impulsione o crescimento.…”

Section: Acumulação De Capital E Distribuição De Renda No Longo Prazounclassified

Entre avanços e inconsistências: as contribuições de Nicholas Kaldor, Michal Kalecki e Joan Robinson para a teoria pós-keynesiana da distribuição de renda

Vital

2017

HEHE

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O objetivo do artigo é resgatar as contribuições de Nicholas Kaldor, Michal Kalecki e Joan Robinson para o desenvolvimento da teoria pós-keynesiana da distribuição de renda. Em primeiro lugar, localizamos o debate de Keynes com Dunlop, Tarshis e Kalecki como ponto de partida para as posteriores análises da temática da distribuição de renda na teoria pós-keynesiana. Em seguida, analisamos as contribuições de Kaldor, Kalecki e Robinson para o desenvolvimento de uma teoria pós-keynesiana da distribuição de renda. A hipótese central do presente estudo é que os autores possuem uma característica em comum fundamental para o pensamento pós-keynesiano: a poupança se ajusta a dado nível de investimento (determinado de forma independente via animal spirits), através da redistribuição de renda entre salários e lucros.

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Wage-led versus profit-led demand regimes: the long and the short of it

Cited by 132 publications

References 105 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

Wage led aggregate demand in the United Kingdom

Entre avanços e inconsistências: as contribuições de Nicholas Kaldor, Michal Kalecki e Joan Robinson para a teoria pós-keynesiana da distribuição de renda

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