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Secular Stagnation and Income Distribution Dynamics

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  • David Kiefer, Ivan Mendieta-Munoz, Codrina Rada, Rudiger von Arnim

Abstract

This paper contributes to the literature on secular stagnation by estimating a measure of potential output growth for the post-war US economy derived from a novel model specification that allows for the cyclical interactions between income distribution, represented by the trajectory of the labor share of income, and economic activity, as measured by capacity utilization. The results obtained show that potential output growth exhibits a gradual decline that predates the Great Recession and follows the downward trajectory of the labor share of income, thus suggesting the existence of an important long-run relationship between income distribution and output growth in the USA.

Suggested Citation

  • David Kiefer, Ivan Mendieta-Munoz, Codrina Rada, Rudiger von Arnim, 2019. "Secular Stagnation and Income Distribution Dynamics," Working Paper Series, Department of Economics, University of Utah 2019_05, University of Utah, Department of Economics.
    • Handle: RePEc:uta:papers:2019_05
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    References listed on IDEAS

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    Cited by:

    1. Remzi Baris Tercioglu, 2020. "A sectoral approach to measuring output gap: Evidence from 20 US industries over 1948-2019," Working Papers 2012, New School for Social Research, Department of Economics.

    More about this item

    Keywords

    Potential output growth; capacity utilization; income distribution; labor share; US economy.;

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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