Demand effects of the falling wage share in Austria
AbstractThis paper aims at empirically estimating the demand effects of changes in functional income distribution for Austria. Based on a Post-Kaleckian macro model, this paper estimates the effects of a change in the wage share on the main demand aggregates. The results for the behavioral functions for consumption, investment, prices, exports and imports are compared with the specifications of the WIFO macro model and the IHS macro model. A reduction in the wage share has a restrictive effect on domestic demand as consumption decreases more strongly than investment increases. Because of the strong effects on net exports the overall effects of a decrease in the wage share are expansionary. However the latter effect operates only as far as the fall in the wage share increases competitiveness. As wage shares were also falling in Austriaâs main trading partners, the effect seems to have been neutralized.
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Bibliographic InfoArticle provided by Springer in its journal Empirica.
Volume (Year): 35 (2008)
Issue (Month): 5 (December)
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Web page: http://www.springerlink.com/link.asp?id=100261
Distribution; Demand; Investment; Consumption; Foreign trade; Macroeconomics; Keynesian economics; E12; E20; E22; E25; E61;
Other versions of this item:
- Engelbert Stockhammer & Stefan Ederer, 2007. "Demand effects of the falling wage share in Austria," Department of Economics Working Papers wuwp106, Vienna University of Economics, Department of Economics.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
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