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A Note on Relative Prices and Income Distribution over the US Business Cycle: 1857–2009

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  • Claudio Alberto Castelo Branco Puty

Abstract

This paper investigates the relation between relative prices and the income distribution by examining variations in output and prices occurred over thirty-three US business cycles from 1857 to 2009. Using a broad database, the author shows that average relative prices in twenty-seven industries of the US economy presented a remarkably smaller variation than the corresponding variation in output levels, profits and wages. These time-series results, although not conclusive, may provide additional empirical evidence of the Ricardian claim that even relative market prices in an industrial economy are strongly dominated by the correspondent integrated unit labor costs and that changes along a wage-profit schedule will play only a secondary role in their determination. JEL classifications: E11, E32

Suggested Citation

  • Claudio Alberto Castelo Branco Puty, 2021. "A Note on Relative Prices and Income Distribution over the US Business Cycle: 1857–2009," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(2), pages 337-354, June.
    • Handle: RePEc:sae:reorpe:v:53:y:2021:i:2:p:337-354
    DOI: 10.1177/0486613420962862
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    References listed on IDEAS

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    1. Hahnel, Robin & Sherman, Howard, 1982. "The Rate of Profit over the Business Cycle," Cambridge Journal of Economics, Oxford University Press, vol. 6(2), pages 185-194, June.
    2. Godley, Wynne A H & Nordhaus, William D, 1972. "Pricing in the Trade Cycle," Economic Journal, Royal Economic Society, vol. 82(327), pages 853-882, September.
    3. Kevin X.D. Huang & Zheng Liu & Louis Phaneuf, 2004. "Why Does the Cyclical Behavior of Real Wages Change Over Time?," American Economic Review, American Economic Association, vol. 94(4), pages 836-856, September.
    4. Bienenfeld, Mel, 1988. "Regularity in Price Changes as an Effect of Changes in Distribution," Cambridge Journal of Economics, Oxford University Press, vol. 12(2), pages 247-255, June.
    5. R. L. Hall & C. J. Hitch, 1939. "Price Theory And Business Behaviour," Oxford Economic Papers, Oxford University Press, vol. 0(1), pages 12-45.
    6. Paolo Sylos-Labini, 1979. "Prices and Income Distribution in Manufacturing Industry," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 2(1), pages 3-25, October.
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    More about this item

    Keywords

    relative prices; business cycle; income distribution;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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