Class Struggle and Economic Flactuations: VAR Analysis of the post-War U.S. Economy

Deepankar Basu (dbasu@econs.umass.edu), Ying Chen (yingc@econs.umass.edu) and Jong-seok Oh (oh@econs.umass.edu)
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Deepankar Basu: Universty of Massachusetts
Ying Chen: University of Massachusetts-Amherst
Jong-seok Oh: University of Massachusetts-Amherst

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: Building on Marx’s insights in Chapter 25, Volume I of Capital, an augmented version of the cyclical profit squeeze (CPS) theory offers a plausible explanation of macroeconomic fluctuations under capitalism. The pattern of dynamic interactions that emerges from a 3-variable (profit share, unemployment rate and nonresidential fixed investment) vector autoregression estimated with quarterly data for the postwar U.S. economy is consistent with the CPS theory for the regulated (1949Q1–1975Q1) as well as for the neoliberal periods (starting in 1980 or in 1985). Hence, the CPS mechanism seems to be in operation even under neoliberalism. JEL Categories: B51; C22

Keywords: cyclical profit squeeze; vector autoregression (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-bec, nep-hme and nep-mac
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