Goodwin or Kalecki in Demand? Functional Income Distribution and Aggregate Demand in the Short Run

Engelbert Stockhammer and Robert Stehrer

Review of Radical Political Economics, 2011, vol. 43, issue 4, 506-522

Abstract: In a seminal paper on Marxian business cycle theory, Goodwin (1967) presented a model which assumed that a higher wage share leads to lower investment and thus a general economic slowdown. In contrast Kalecki (1971) was arguing that a higher wage share would have an expansionary effect because the consumption propensity out of wage income is higher than that out of profit income. Based on a general model that allows for wage-led as well as profit-led demand regimes, this paper estimates the effects of a change in the wage share on aggregate private domestic demand with quarterly data for 12 OECD countries.JEL classification: E11, E12, E20, E22, E25

Keywords: functional income distribution; demand; Goodwin cycle; Kalecki; post-Keynesian economics; Marxian economics (search for similar items in EconPapers)
Date: 2011
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Working Paper: Goodwin or Kalecki in Demand? Functional Income Distribution and Aggregate Demand in the Short Run (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:reorpe:v:43:y:2011:i:4:p:506-522

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