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Estimating a Time-Varying Distribution-Led Regime

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  • Paul Carrillo-Maldonado
  • Michalis Nikiforos

Abstract

This paper estimates the distribution-led regime of the US economy for the period 1947-2019. We use a time varying parameter model, which allows for changes in the regime over time. To the best of our knowledge this is the first paper that has attempted to do this. This innovation is important, because there is no reason to expect that the regime of the US economy (or any economy for that matter) remains constant over time. On the contrary, there are significant reasons that point to changes in the regime. We find that the US economy became more profit-led in the first postwar decades until the 1970s and has become less profit-led since; it is slightly wage-led over the last fifteen years.

Suggested Citation

  • Paul Carrillo-Maldonado & Michalis Nikiforos, 2022. "Estimating a Time-Varying Distribution-Led Regime," Economics Working Paper Archive wp_1001, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_1001
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    References listed on IDEAS

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    1. Robert A. Blecker, 2016. "Wage-led versus profit-led demand regimes: the long and the short of it," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 373-390, October.
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    More about this item

    Keywords

    Wage-led; Profit-led; Distribution; Growth; Time-Varying Parameters (VAR);
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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