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Estimation of the Distribution and Demand Dynamics in Turkey: Structural Vector Autoregression Approach to a Post-Keynesian Model

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  • Betul Mutlugun

    (Istanbul University, Faculty of Economics, Istanbul, Turkiye)

  • Ahmet Ä°ncekara

    (Istanbul University, Faculty of Economics, Istanbul, Turkiye)

Abstract

In this study, we present an empirical investigation into demand and distribution dynamics using structural vector autoregression analysis for Turkey between the period 1970-2017. The theoretical analysis is based on a Kaleckian dynamic macro model where distributive shares are determined endogenously by introducing Rowthorn’s conflicting claims on income by workers and firms and labor productivity is allowed to vary with the level of capacity utilization due to economies of scale due to Kaldor–Verdoorn effects and wage-push effects according to Marx. Our findings indicate that increases in wage share lead to an increase in accumulation and growth which suggests wage-led effective demand, while distributive dynamics demonstrate profit-squeeze results, at least in the short run. Moreover, the empirical model confirms most of the typical Kaleckian results.

Suggested Citation

  • Betul Mutlugun & Ahmet Ä°ncekara, 2023. "Estimation of the Distribution and Demand Dynamics in Turkey: Structural Vector Autoregression Approach to a Post-Keynesian Model," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(73-1), pages 1-54, June.
    • Handle: RePEc:ist:journl:v:73:y:2023:i:1:p:1-54
    DOI: 10.26650/ISTJECON2022-1275817
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    More about this item

    Keywords

    Income distribution; Kaleckian model; effective demand; structural vector autoregression model; Turkish economy JEL Classification: E12; E25; C32;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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