EconPapers    
Economics at your fingertips  
 

The Impact of Income Distribution on the Current Account

Jorge Carrera, Rodriguez Esteban (esteban.rgz@gmail.com) and Sardi Mariano (mjsardi@yahoo.com.ar)
Additional contact information
Rodriguez Esteban: University of Buenos Aires, CABA, Argentina
Sardi Mariano: University of Buenos Aires, CABA, Argentina

Journal of Globalization and Development, 2016, vol. 7, issue 2, 20

Abstract: This paper analyzes the relationship between inequality and the current account, addressing the role of the functional distribution of income. Using panel data for 60 countries over the period 1975–2011, our results confirm that an increase in the wage share is associated with a decrease in the current account. We also analyze the effects of wage share on saving and investment, maintaining the same control variables. We find that the wage share is negatively correlated with saving and does not have a significant effect on investment. This result is consistent with the theories that connect higher wages with greater consumption and less saving. The relationship is stronger for developing economies, highlighting the structural differences between different groups of countries. Specifically, the relevance and sign of control variables like financial intermediation, fiscal balance, demographic ratios, capital account openness and growth expectations show important differences according to the level of development.

Keywords: aggregate demand; current account; functional distribution of income; inequality (search for similar items in EconPapers)
JEL-codes: C23 D31 D33 E21 F32 F41 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/jgd-2016-0012 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:globdv:v:7:y:2016:i:2:p:20:n:1

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/jgd/html

DOI: 10.1515/jgd-2016-0012

Access Statistics for this article

Journal of Globalization and Development is currently edited by Joseph E. Stiglitz, Kevin Gallagher, Jeronim Capaldo, Arjun Jayadev, José Antonio Ocampo and Dani Rodrik

More articles in Journal of Globalization and Development from De Gruyter
Bibliographic data for series maintained by Peter Golla (peter.golla@degruyter.com).

 
Page updated 2024-11-05
Handle: RePEc:bpj:globdv:v:7:y:2016:i:2:p:20:n:1