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Full-Text Articles in Social and Behavioral Sciences
What Is The Impact Of An Exogenous Shock To The Wage Share? Var Results For The Us Economy, 1973–2018, Deepankar Basu, Leila Gautham
What Is The Impact Of An Exogenous Shock To The Wage Share? Var Results For The Us Economy, 1973–2018, Deepankar Basu, Leila Gautham
Economics Department Working Paper Series
This paper uses a novel empirical strategy to present empirical estimates of the effect of an exogenous shock to distribution on demand and accumulation for the US economy from 1973 to 2018. We use recursive vector autoregressions to identify the impact of shocks to the wage share. We impose restrictions motivated by a simple neo-Kaleckian open- economy model, and build on the recursive identification scheme in Christiano, Eichenbaum and Evans (1999) to show that this small set of plausible and transparent assumptions are sufficient to identify the impact of shocks to distribution. We find that positive shocks to the wage …
Is The Nature Of The Demand Regime Relevant Over The Medium Run? Revisiting Distributional Issues In A Portfolio Framework Under Different Exchange Rate Regimes, Arslan Razmi
Economics Department Working Paper Series
Is growth in capitalist economies wage-led or profit-led? Empirical studies have found conflicting results for different countries and periods. Possible reasons may include the endogeneity of distributional shares, differences in the monetary policy/exchange rate regimes across countries, and divergence between macro behavior in the short- and medium-runs. I theoretically explore these possibilities using a portfolio balance framework to keep track of asset stocks and wealth effects over time. With fixed exchange rates, the Central Bank’s need to intervene in the asset market via official reserve transactions results in assigning a crucial role to the current account in constraining accumulation and …
Growth And Distribution In Low Income Economies: Modifying Post Keynesian Analysis In Light Of Theory And History, Arslan Razmi
Growth And Distribution In Low Income Economies: Modifying Post Keynesian Analysis In Light Of Theory And History, Arslan Razmi
Economics Department Working Paper Series
Growth in low-income developing economies with large sectors characterized by underemployment is unlikely to be wage-led in the traditional neo-Kaleckian sense of the term. Output and employment in the sectors of the economy producing non-tradable output could be demand-led, however, and policies directly aimed at more equitable distribution in these sectors could boost long-run growth. Some of the fast growing Asian economies may have been examples of wage-led growth in this rather different sense of the term. Over time, re-distributive measures in the traditional sector, such as land reforms, could lead to faster wage and output growth across the economy.
The Limits To Wage-Led Growth In A Low-Income Economy, Arslan Razmi
The Limits To Wage-Led Growth In A Low-Income Economy, Arslan Razmi
Economics Department Working Paper Series
Neo-Kaleckian literature has actively debated whether growth is wage- or profit-led in capitalist economies. However, existing studies tend to ignore the non-tradable sector and heterogeneity within the tradable sector. This paper shows that incorporating these features renders wage-led growth in an open developing economy unfeasible in the traditional (Kaleckian) sense of the term. This result -- which follows even if one sets aside the competitiveness considerations generally seen as impeding such growth -- occurs due to the presence of a homogeneous goods-producing tradable sector that sets the ceiling to steady state growth. A corollary, in light of findings from the …
Re-Distribution, Aggregate Demand, And Growth In An Open Economy: The Crucial Interaction Of Portfolio Considerations And External Account Constraints, Arslan Razmi
Economics Department Working Paper Series
A large body of literature inspired by the seminal contribution of Marglin and Bhaduri (1988) has debated the distributional determinants of demand and growth. A general conclusion has been that open economy considerations weaken the potential for a wage-led growth regime. How- ever, this literature has largely ignored asset portfolio considerations and the stock and flow interactions that result from the feedback from savings to wealth and from wealth to the current account. This paper develops a theoretical framework that speci.es a fuller system of (instantaneous) flow equilibria embedded in a medium-run framework with stable steady state stocks of real …