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Income distribution and aggregate demand: a global Post-Keynesian model

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  • Onaran, Özlem
  • Galanis, Giorgos

Abstract

This paper estimates the effects of a change in the wage share on growth at a national and global level in the G20 countries. A decrease in the wage share leads to lower growth in the euro area, Germany, France, Italy, UK, US, Japan, Turkey, and Korea, whereas it stimulates growth in Canada, Australia, Argentina, Mexico, China, India, and South Africa. However, a simultaneous decline in the wage share in all these countries leads to a decline in global growth. Furthermore, Canada, Argentina, Mexico, and India also contract when they decrease their wage-share along with their trading partners.

Suggested Citation

  • Onaran, Özlem & Galanis, Giorgos, 2013. "Income distribution and aggregate demand: a global Post-Keynesian model," Greenwich Papers in Political Economy 14052, University of Greenwich, Greenwich Political Economy Research Centre.
    • Handle: RePEc:gpe:wpaper:14052
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    5. Ozlem Onaran, 2009. "Wage share, globalization and crisis: the case of the manufacturing industry in Korea, Mexico and Turkey," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(2), pages 113-134.
    6. Özlem Onaran & Giorgos Galanis, 2013. "Income Distribution and Aggregate Demand: A Global Post-Keynesian Model," Working Papers wp319, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Ann Harrison, 2022. "Has Globalization Eroded Labor’s Share? Some Cross-Country Evidence," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 5, pages 89-135, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Alberto Cardaci & Francesco Saraceno, 2019. "Inequality and imbalances: a monetary union agent-based model," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 853-890, July.
    2. Onaran, Özlem & Galanis, Giorgos, 2013. "Income distribution and aggregate demand: a global Post-Keynesian model," Greenwich Papers in Political Economy 14052, University of Greenwich, Greenwich Political Economy Research Centre.

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    More about this item

    Keywords

    wage share; growth; global multiplier; consumption; investment; exports; imports; G20; developed and developing countries;
    All these keywords.

    JEL classification:

    • 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
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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