Goodwin or Kalecki in Demand? Functional Income Distribution and Aggregate Demand in the Short Run
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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- 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.
- Engelbert Stockhammer & Eckhard Hein & Lucas Grafl, 2007. "Globalization and the effects of changes in functional income distribution on aggregate demand in Germany," Department of Economics Working Papers wuwp114, Vienna University of Economics and Business, Department of Economics.
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