IDEAS home Printed from https://ideas.repec.org/a/sae/reorpe/v43y2011i4p506-522.html
   My bibliography  Save this article

Goodwin or Kalecki in Demand? Functional Income Distribution and Aggregate Demand in the Short Run

Author

Listed:
  • Engelbert Stockhammer

    (Kingston University, London, UK)

  • Robert Stehrer

    (Vienna Institute for International Economic Studies, Vienna, Austria)

Abstract

In a seminal paper on Marxian business cycle theory, Goodwin (1967) presented a model which assumed that a higher wage share leads to lower investment and thus a general economic slowdown. In contrast Kalecki (1971) was arguing that a higher wage share would have an expansionary effect because the consumption propensity out of wage income is higher than that out of profit income. Based on a general model that allows for wage-led as well as profit-led demand regimes, this paper estimates the effects of a change in the wage share on aggregate private domestic demand with quarterly data for 12 OECD countries.JEL classification: E11, E12, E20, E22, E25

Suggested Citation

  • Engelbert Stockhammer & Robert Stehrer, 2011. "Goodwin or Kalecki in Demand? Functional Income Distribution and Aggregate Demand in the Short Run," Review of Radical Political Economics, Union for Radical Political Economics, vol. 43(4), pages 506-522, December.
    • Handle: RePEc:sae:reorpe:v:43:y:2011:i:4:p:506-522
    as

    Download full text from publisher

    File URL: http://rrp.sagepub.com/content/43/4/506.abstract
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Özlem Onaran & Engelbert Stockhammer, 2005. "Two Different Export-Oriented Growth Strategies: Accumulation and Distribution in Turkey and South Korea," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 41(1), pages 65-89, January.
    2. Özlem Onaran & Engelbert Stockhammer & Lukas Grafl, 2009. "The finance-dominated growth regime, distribution, and aggregate demand in the US," Department of Economics Working Papers wuwp126, Vienna University of Economics and Business, Department of Economics.
    3. Epstein,Gerald A. & Gintis,Herbert M., 2011. "Macroeconomic Policy after the Conservative Era," Cambridge Books, Cambridge University Press, number 9780521148412.
    4. Jonathan P. Goldstein, 1999. "Predator–Prey Model Estimates of the Cyclical Profit Squeeze," Metroeconomica, Wiley Blackwell, vol. 50(2), pages 139-173, June.
    5. Stockhammer, Engelbert & Onaran, Ozlem, 2004. "Accumulation, distribution and employment: a structural VAR approach to a Kaleckian macro model," Structural Change and Economic Dynamics, Elsevier, vol. 15(4), pages 421-447, December.
    6. Eckhard Hein & Achim Truger (ed.), 2007. "Money, Distribution and Economic Policy," Books, Edward Elgar Publishing, number 12580.
    7. Goldstein, Jonathan, 1986. "Markup Variability and Flexibility: Theory and Empirical Evidence," The Journal of Business, University of Chicago Press, vol. 59(4), pages 599-621, October.
    8. Eckhard Hein & Achim Truger (ed.), 2007. "Money, Distribution And Economic Policy - Alternatives to Orthodox Macroeconomics," Conference proceedings of the Research Network Macroeconomics and Macroeconomic Policies (FMM), IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute, number 9a-2007.
    9. Engelbert Stockhammer & Stefan Ederer, 2008. "Demand effects of the falling wage share in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(5), pages 481-502, December.
    10. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Oxford University Press, vol. 32(3), pages 479-511, May.
    11. Nelson H. Barbosa‐Filho & Lance Taylor, 2006. "Distributive And Demand Cycles In The Us Economy—A Structuralist Goodwin Model," Metroeconomica, Wiley Blackwell, vol. 57(3), pages 389-411, July.
    12. Desai, Meghnad, 1973. "Growth cycles and inflation in a model of the class struggle," Journal of Economic Theory, Elsevier, vol. 6(6), pages 527-545, December.
    13. C. Naastepad & Servaas Storm, 2006. "OECD demand regimes (1960-2000)," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(2), pages 211-246.
    14. Engelbert Stockhammer & Eckhard Hein & Lucas Grafl, 2011. "Globalization and the effects of changes in functional income distribution on aggregate demand in Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 1-23.
    15. Philip Arestis & Eckhard Hein & Edwin Le Héron, 2007. "Aspects of Modern Monetary and Macroeconomic Policies," Post-Print halshs-00155170, HAL.
    16. Stefan Eger & Engelbert Stockhammer, 2007. "Wages and Aggregate Demand: An Empirical Investigation for France," Chapters, in: Eckhard Hein & Achim Truger (ed.), Money, Distribution and Economic Policy, chapter 6, Edward Elgar Publishing.
    17. Rowthorn, R E, 1977. "Conflict, Inflation and Money," Cambridge Journal of Economics, Oxford University Press, vol. 1(3), pages 215-239, September.
    18. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-393, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Engelbert Stockhammer & Ozlem Onaran, 2013. "Wage-led growth: theory, evidence, policy," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 61-78, January.
    2. Engelbert Stockhammer, 2015. "Wage-led versus profit-led demand: What have we learned? A Kalecki-Minsky view," Working Papers PKWP1512, Post Keynesian Economics Society (PKES).
    3. Engelbert Stockhammer & Eckhard Hein & Lucas Grafl, 2011. "Globalization and the effects of changes in functional income distribution on aggregate demand in Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 1-23.
    4. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    5. Cárdenas, Luis & Fernández, Rafael, 2020. "Revisiting francoist developmentalism: The influence of wages in the Spanish growth model," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 260-268.
    6. Cem Oyvat & Oğuz Öztunalı & Ceyhun Elgin, 2020. "Wage‐led versus profit‐led demand: A comprehensive empirical analysis," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 458-486, July.
    7. Hein, Eckhard, 2011. "Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies," MPRA Paper 31180, University Library of Munich, Germany.
    8. Eckhard Hein & Artur Tarassow, 2010. "Distribution, aggregate demand and productivity growth: theory and empirical results for six OECD countries based on a post-Kaleckian model," Cambridge Journal of Economics, Oxford University Press, vol. 34(4), pages 727-754.
    9. Stockhammer, Engelbert & Rabinovich, Joel & Reddy, Niall, 2017. "Distribution, wealth and demand regimes in historical perspective. USA, UK, France and Germany, 1855-2010," Economics Discussion Papers 2017-5, School of Economics, Kingston University London.
    10. Engelbert Stockhammer & Joel Rabinovich & Niall Reddy, 2018. "Distribution, wealth and demand regimes in historical perspective," FMM Working Paper 14-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    11. Robert A. Blecker, 2016. "Wage-led versus profit-led demand regimes: the long and the short of it," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 373-390, October.
    12. Jochen Hartwig, 2018. "Wachstumsfolgen von Einkommensungleichheit – Theorie, empirische Evidenz und Politikempfehlungen," Chemnitz Economic Papers 020, Department of Economics, Chemnitz University of Technology.
    13. Hartwig, Jochen, 2015. "Structural change, aggregate demand and employment dynamics in the OECD, 1970–2010," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 36-45.
    14. Robert Jump & Ivan Mendieta-Muñoz, 2017. "Wage led aggregate demand in the United Kingdom," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 565-584, September.
    15. Anıl BÖLÜKOĞLU, 2019. "Demand Regime of Turkey: A Post-Keynesian Econometric Analysis," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(42).
    16. Jochen Hartwig, 2013. "Ist Lohnzurückhaltung gut oder schlecht für das Schweizer Wirtschaftswachstum?," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 7(2), pages 33-45, June.
    17. Özlem Onaran & Giorgos Galanis, 2013. "Income distribution and aggregate demand: A global Post-Keynesian model," Working Papers PKWP1304, Post Keynesian Economics Society (PKES).
    18. Michalis Nikiforos & Duncan Foley, 2011. "Distribution and Capacity: Conceptual Issues and Empirical Evidence September," Working Papers 1105, New School for Social Research, Department of Economics.
    19. Jochen Hartwig, 2014. "Testing the Bhaduri-Marglin model with OECD panel data," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(4), pages 419-435, July.
    20. Betül Mutlugün, 2022. "Endogenous income distribution and aggregate demand: Empirical evidence from heterogeneous panel structural vector autoregression," Metroeconomica, Wiley Blackwell, vol. 73(2), pages 583-637, May.

    More about this item

    Keywords

    functional income distribution; demand; Goodwin cycle; Kalecki; post-Keynesian economics; Marxian economics;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • 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 - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:reorpe:v:43:y:2011:i:4:p:506-522. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.urpe.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.