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Class struggle and economic fluctuations: VAR analysis of the post-war US economy

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  • Deepankar Basu
  • Ying Chen
  • Jong-seok Oh

Abstract

Building on Marx's insights in Chapter 25, Volume I of Capital, an augmented version of the cyclical profit squeeze (CPS) theory offers a plausible explanation of macroeconomic fluctuations under capitalism. The pattern of dynamic interactions that emerges from a 3-variable (profit share, unemployment rate and nonresidential fixed investment) vector autoregression estimated with quarterly data for the postwar U.S. economy is consistent with the CPS theory for the regulated (1949Q4--1975Q1) as well as for the neoliberal periods (starting in 1980 or in 1985). Hence, the CPS mechanism seems to be in operation even under neoliberalism.

Suggested Citation

  • Deepankar Basu & Ying Chen & Jong-seok Oh, 2013. "Class struggle and economic fluctuations: VAR analysis of the post-war US economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(5), pages 575-596, September.
  • Handle: RePEc:taf:irapec:v:27:y:2013:i:5:p:575-596
    DOI: 10.1080/02692171.2012.760065
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    References listed on IDEAS

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    1. Jonathan P. Goldstein, 1999. "Predator–Prey Model Estimates of the Cyclical Profit Squeeze," Metroeconomica, Wiley Blackwell, vol. 50(2), pages 139-173, June.
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    5. Thomas R. Michl, 1988. "The Two-Stage Decline in U.S. Nonfinancial Corporate Profitability, 1948-1986," Review of Radical Political Economics, Union for Radical Political Economics, vol. 20(4), pages 1-22, December.
    6. James H. Stock & Mark W. Watson, 2001. "Vector Autoregressions," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 101-115, Fall.
    7. Jonathan P. Goldstein, 1985. "The Cyclical Profit Squeeze: A Marxian Microfoundation," Review of Radical Political Economics, Union for Radical Political Economics, vol. 17(1-2), pages 103-128, March.
    8. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    9. David M. Kotz, 2009. "The Financial and Economic Crisis of 2008: A Systemic Crisis of Neoliberal Capitalism," Review of Radical Political Economics, Union for Radical Political Economics, vol. 41(3), pages 305-317, September.
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    Cited by:

    1. repec:taf:irapec:v:31:y:2017:i:2:p:151-172 is not listed on IDEAS
    2. Guilherme Klein Martins & Fernando Rugitsky, 2018. "The commodities boom and the profit squeeze: output and profit cycles in Brazil (1996-2016)," Working Papers, Department of Economics 2018_09, University of São Paulo (FEA-USP).
    3. Joao Paulo A. de Souza, 2014. "Real wages and labor-saving technical change: evidence from a panel of manufacturing industries in mature and labor-surplus economies," UMASS Amherst Economics Working Papers 2014-03, University of Massachusetts Amherst, Department of Economics.

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