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Distribution and growth in France and Germany - single equation estimations and model simulations based on the Bhaduri/Marglin-model

  • Eckhard Hein


    (IMK at the Hans Boeckler Foundation)

  • Lena Vogel


    (University of Hamburg (Student))

The authors analyse the relationship between functional income distribution and economic growth in France and Germany from 1960 until 2005. The analysis is based on a demand-driven distribution and growth model for an open economy inspired by Bhaduri/Marglin (1990), which allows for profit- or wage-led growth. First, the authors apply a single equation approach, estimating the effects of redistribution on the demand aggregates and summing up these effects in order to obtain the total effect of redistribution on GDP growth. Since interactions between the demand aggregates are omitted from this approach, the authors also apply a simulation approach taking into account these interactions. In the single equations approach the authors find that growth in France and in Germany was wage-led. This qualitative result is confirmed by the simulation approach, but the quantitative effects differ somewhat. Whereas in the single equation approach the wage-led nature of the demand regime in Germany seems to be more pronounced than in France, in the simulation approach the effects in the two countries seem to converge.

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Paper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Working Paper with number 04-2007.

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Length: 52 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:imk:wpaper:04-2007
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  1. Miguel A. LeÛn-Ledesma & A. P. Thirlwall, 2002. "The endogeneity of the natural rate of growth," Cambridge Journal of Economics, Oxford University Press, vol. 26(4), pages 441-459, July.
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  3. Till van Treeck, 2008. "Reconsidering The Investment-Profit Nexus In Finance-Led Economies: An Ardl-Based Approach," Metroeconomica, Wiley Blackwell, vol. 59(3), pages 371-404, 07.
  4. Engelbert Stockhammer, 2006. "Shareholder value orientation and the investment-profit puzzle," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 28(2), pages 193-215, January.
  5. Amitava Krishna Dutt, 2006. "Aggregate Demand, Aggregate Supply and Economic Growth," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 319-336.
  6. Marc Lavoie, 1995. "Interest Rates In Post-Keynesian Models Of Growth And Distribution," Metroeconomica, Wiley Blackwell, vol. 46(2), pages 146-177, 06.
  7. Eckhard Hein & Lena Vogel, 2007. "Distribution and growth reconsidered - empirical results for Austria, France, Germany, the Netherlands, the UK and the USA," IMK Working Paper 03-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  8. Edward Amadeo, 1987. "Expectations in a steady state model of capacity utilization," Textos para discussão 169, Department of Economics PUC-Rio (Brazil).
  9. Blecker, Robert A, 1989. "International Competition, Income Distribution and Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 13(3), pages 395-412, September.
  10. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
  11. Engelbert Stockhammer, 2000. "Financialization and the Slowdown of Accumulation," Working Papers geewp14, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  12. Dutt, Amitava Krishna, 1987. "Alternative Closures Again: A Comment on 'Growth, Distribution and Inflation.'," Cambridge Journal of Economics, Oxford University Press, vol. 11(1), pages 75-82, March.
  13. Amit Bhaduri, 2006. "Endogenous economic growth: a new approach," Cambridge Journal of Economics, Oxford University Press, vol. 30(1), pages 69-83, January.
  14. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Oxford University Press, vol. 32(3), pages 479-511, May.
  15. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-93, December.
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