Functional income distribution and aggregate demand in the Euro-area.
Stockhammer, Engelbert and Onaran, Ozlem and Ederer, Stefan (2009) Functional income distribution and aggregate demand in the Euro-area. Cambridge Journal of Economics, 33 (1). pp. 139-159. ISSN 0309-166X
Full text is not in this repository.
Official URL: http://tinyurl.com/ycexefl
This item is available in the Library Catalogue
An increase in the wage share has contradictory effects on the subaggregates of aggregate demand. Private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes. Investment expenditures ought to be negatively affected because investment will positively depend on profits. Net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labour costs and thus a loss in competitiveness. Therefore, theoretically, aggregate demand can be either wage-led or profit-led depending on how these effects add up. The results will crucially depend on how open the economy is internationally. The paper estimates a post-Kaleckian macro model incorporating these effects for the Euro area and finds that the Euro area is presently in a wage-led demand regime. Implications for wage policies are discussed.
|Research Areas:||A. > Business School > Economics|
|Citations on ISI Web of Science:||13|
|Deposited On:||01 Mar 2010 09:03|
|Last Modified:||15 Oct 2013 07:19|
Repository staff only: item control page
Full text downloads (NB count will be zero if no full text documents are attached to the record)
Downloads per month over the past year