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Distribution and Capacity: Conceptual Issues and Empirical Evidence September

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  • Michalis Nikiforos

    (Department of Economics, New School for Social Research)

  • Duncan Foley

    (Department of Economics, New School for Social Research)

Abstract

This paper examines the relationship between the distribution of income and capacity utilization in the context of the Kaleckian model of growth and distribution. We provide an exposition of the underlying theory of wage- and profit-led growth. We emphasize the implications of possible non-linearities in the determination of the final equilibrium and why—because of them—a redefinition of the concept of wage- and profit-led economy is necessary. We estimate the demand and distribution schedule for the US economy using a 2SLS approach. Our findings confirm the hypothesis of a non-linear distribution schedule and therefore the need to redefine the concepts wage- and profit-led growth.

Suggested Citation

  • 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.
    • Handle: RePEc:new:wpaper:1105
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    More about this item

    Keywords

    Distribution; Utilization; Non-linearities;
    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
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • 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
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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