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Technology, demand and distribution: a cumulative growth model with an application to the Dutch productivity growth slowdown

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  • C. W. M. Naastepad

Abstract

This paper argues that the case for real wage growth restraint, and the consequent restoration of profitability, which the mainstream consensus regards as a necessary condition for sustained output and productivity growth, is based on weak foundations, because it neglects the negative impact of wage moderation on productivity growth. Using a general Keynesian growth model, which integrates a (wage-led or profit-led) demand regime and a productivity regime (incorporating the productivity-growth enhancing effects of higher demand and higher real wages), the conditions are identified under which real wage restraint fails to raise output and productivity growth. The model is applied empirically to the Netherlands (1960--2000). Copyright 2006, Oxford University Press.

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  • C. W. M. Naastepad, 2006. "Technology, demand and distribution: a cumulative growth model with an application to the Dutch productivity growth slowdown," Cambridge Journal of Economics, Oxford University Press, vol. 30(3), pages 403-434, May.
  • Handle: RePEc:oup:cambje:v:30:y:2006:i:3:p:403-434
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    File URL: http://hdl.handle.net/10.1093/cje/bei063
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    Cited by:

    1. Eckhard Hein & Achim Truger, 2011. "Fiscal Policy in the Macroeconomic Policy Mix: A Critique of the New Consensus Model and a Comparison of Macroeconomic Policies in France, Germany, the UK and Sweden from a Post-Keynesian Perspective," Chapters,in: Credit, Money and Macroeconomic Policy, chapter 12 Edward Elgar Publishing.
    2. 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.
    3. Rafael Fernández & Enrique Palazuelos, 2009. "Labor productivity: a comparative analysis of the European Union and United States, for the period 1994-2007," Working Papers wp208, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. 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.
    5. Codrina Rada, 2009. "Introducing Demographic Changes in a Model of Economic Growth and Income Distribution," Working Paper Series, Department of Economics, University of Utah 2009_01, University of Utah, Department of Economics.
    6. Olivier Allain, 2006. "La modération salariale : le point de vue des (néo-)kaleckiens," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00196500, HAL.
    7. 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 105-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

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