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Distribution, aggregate demand and productivity growth - theory and empirical results for six OECD countries based on a Post-Kaleckian model

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  • Eckhard Hein

    ()
    (IMK at the Hans Boeckler Foundation and Carl von Ossietzky University Oldenburg, Germany)

  • Artur Tarassow

    (University of Hamburg)

Abstract

Empirical research based on the Bhaduri/Marglin-variant of the Kaleckian model has recently shown that aggregate demand in many medium-sized and large open economies tends to be wage-led in the medium to long run, even in a period of increasing globalisation. In this paper we extend this type of analysis and integrate the effects on productivity growth, theoretically and empirically. Productivity growth is introduced into the theoretical model making use of the Verdoorn effect or of Kaldor’s technical progress function and hence of a positive relationship between GDP or capital stock growth and productivity growth. Further on, a costpush or Marx/Hicks-effect and hence a positive impact of real wage growth or the wage share on productivity growth is taken into account. In the empirical part we estimate productivity growth equations for six countries introducing these two effects. Finally, economic policy conclusions are drawn.

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Bibliographic Info

Paper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Working Paper with number 18-2008.

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Length: 41 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:imk:wpaper:18-2008

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Keywords: Demand-led growth; endogenous technical change; wage-led and profit-led demand regimes; productivity regime;

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  1. Miguel A. León-Ledesma & A. P. Thirlwall, 1998. "The Endogeneity of the Natural Rate of Growth," Studies in Economics, Department of Economics, University of Kent 9821, Department of Economics, University of Kent.
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Citations

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Cited by:
  1. Hein, Eckhard, 2009. "‘Financialisation’, distribution, capital accumulation and productivity growth in a Post-Kaleckian model," MPRA Paper 18574, University Library of Munich, Germany.
  2. Loaiza Quintero, Osmar Leandro & Sierra Ríos, Ana Milena, 2010. "Salarios, demanda agregada y desempeño económico en Colombia: un debate no resuelto
    [Wages, aggregate demand and economic performance in Colombia: an unsolved debate]
    ," MPRA Paper 42669, University Library of Munich, Germany.
  3. Thomas I. Palley, 2012. "A neo-Kaleckian - Goodwin model of capitalist economic growth: Monopoly power,managerial pay, labor market conflict, and endogenous technical progress," IMK Working Paper, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute 105-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  4. Engelbert Stockhammer & Özlem Onaran, 2012. "Wage-led Growth: Theory, Evidence, Policy," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp300, Political Economy Research Institute, University of Massachusetts at Amherst.
  5. Storm, Servaas & Naastepad, C.W.M, 2012. "Wage-led or profit-led supply : wages, productivity and investment," ILO Working Papers, International Labour Organization 470930, International Labour Organization.
  6. Loaiza Quintero, O.L., 2011. "La demanda agregada y la distribución del ingreso: Un estudio a partir de los modelos de crecimiento kaleckianos
    [Aggregate Demand and Income Distribution: A Kaleckian Growth Model Approach]
    ," MPRA Paper 42667, University Library of Munich, Germany, revised 01 Apr 2011.
  7. Hein, Eckhard, 2011. "Distribution, 'financialisation' and the financial and economic crisis: Implications for post-crisis economic policies," IPE Working Papers, Berlin School of Economics and Law, Institute for International Political Economy (IPE) 09/2011, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  8. Thomas I. Palley, 2013. "Enriching the Neo-Kaleckian Growth Model: Nonlinearities, Political Economy, and Financial Factors," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp335, Political Economy Research Institute, University of Massachusetts at Amherst.
  9. Hein, Eckhard & Mundt, Matthias, 2012. "Financialisation and the requirements and potentials for wage-led recovery : a review focussing on the G20," ILO Working Papers, International Labour Organization 470932, International Labour Organization.
  10. Jochen Hartwig, 2014. "Testing the Bhaduri-Marglin Model with OECD Panel Data," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 14-349, KOF Swiss Economic Institute, ETH Zurich.
  11. Jochen Hartwig, 2013. "Ist Lohnzurückhaltung gut oder schlecht für das Schweizer Wirtschaftswachstum?," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, KOF Swiss Economic Institute, ETH Zurich, vol. 7(2), pages 33-45, June.
  12. Jakob Kapeller & Bernhard Schütz, 2012. "Conspicuous consumption, inequality and debt: The nature of consumption-driven profit-led regimes," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2012-13, Department of Economics, Johannes Kepler University Linz, Austria.

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