The Macroeconomic Implications of Profit Sharing: Some Empirical Evidence

Sushil Wadhwani

Economic Journal, 1987, vol. 97, issue 388a, 171-83

Abstract: The Macroeconomic Implications of Profit Sharing: Some Empiricals paper attempts an empirical assessment of Weitzman's proposition that profit sharing provides an antidote to stagflation. Taking Japan as an example of a profit-sharing economy, the author shows that it does not have either lower cyclical variability of output or lower inflation than other industrial countries. The authors then reject the propositions that in a profit-sharing economy: (1) aggregate demand shocks have a smaller effect on output deviations and (2) import price shocks and wage push have a smaller effect on inflation. Therefore, one should be wary of the claim that the Japanese case supports Weitzman's model. Copyright 1987 by Royal Economic Society.

Date: 1987
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