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

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Author Info

  • 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

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Bibliographic Info

Article provided by Union for Radical Political Economics in its journal Review of Radical Political Economics.

Volume (Year): 43 (2011)
Issue (Month): 4 (December)
Pages: 506-522

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Handle: RePEc:sae:reorpe:v:43:y:2011:i:4:p:506-522

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Related research

Keywords: functional income distribution; demand; Goodwin cycle; Kalecki; post-Keynesian economics; Marxian economics;

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References

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  1. 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.
  2. 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.
  3. �Zlem Onaran & Engelbert Stockhammer, 2005. "Two Different Export-Oriented Growth Strategies: Accumulation and Distribution in Turkey and South Korea," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 41(1), pages 65-89, January.
  4. 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.
  5. 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, 07.
  6. Jonathan P. Goldstein, 1999. "Predator–Prey Model Estimates of the Cyclical Profit Squeeze," Metroeconomica, Wiley Blackwell, vol. 50(2), pages 139-173, 06.
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Citations

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Cited by:
  1. Jakob Kapeller & Bernhard Schütz, 2012. "Conspicuous consumption, inequality and debt: The nature of consumption-driven profit-led regimes," Economics working papers 2012-13, Department of Economics, Johannes Kepler University Linz, Austria.
  2. Özlem Onaran & Giorgos Galanis, 2013. "Income Distribution and Aggregate Demand: A Global Post-Keynesian Model," Working Papers wp319, Political Economy Research Institute, University of Massachusetts at Amherst.
  3. Engelbert Stockhammer, 2011. "Polarisierung der Einkommensverteilung als strukturelle Ursache der gegenwärtigen Finanz- und Wirtschaftskrise," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 37(3), pages 378-402.
  4. Tarassow, Artur, 2010. "The empirical relevance of Goodwin’s business cycle model for the US economy," MPRA Paper 21012, University Library of Munich, Germany.
  5. Kemp-Benedict, Eric, 2014. "A Kaleckian Model with Intermediate Goods," MPRA Paper 57076, University Library of Munich, Germany.
  6. Hanappi, Hardy, 2013. "Future methods of political economy: from Hicks’ equation systems to evolutionary macroeconomic simulation," MPRA Paper 47181, University Library of Munich, Germany.
  7. Jochen Hartwig, 2014. "Testing the Bhaduri-Marglin Model with OECD Panel Data," KOF Working papers 14-349, KOF Swiss Economic Institute, ETH Zurich.
  8. Eckhard Hein & Artur Tarassow, 2008. "Distribution, aggregate demand and productivity growth - theory and empirical results for six OECD countries based on a Post-Kaleckian model," IMK Working Paper 18-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

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