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Secular Stagnation and Income Distribution Dynamics

David Kiefer, Ivan Mendieta-Muñoz, Codrina Rada and Rudiger von Arnim ()
Authors registered in the RePEc Author Service: Ivan Mendieta-Muñoz

Review of Radical Political Economics, 2020, vol. 52, issue 2, 189-207

Abstract: This paper contributes to the literature on secular stagnation by estimating a measure of potential output growth for the post-war US economy derived from a novel model specification that allows for the cyclical interactions between income distribution, represented by the trajectory of the labor share of income, and economic activity, as measured by capacity utilization. The results obtained show that potential output growth exhibits a gradual decline that predates the Great Recession and follows the downward trajectory of the labor share of income, thus suggesting the existence of an important long-run relationship between income distribution and output growth in the United States.

Keywords: potential output growth; capacity utilization; income distribution; labor share; US economy (search for similar items in EconPapers)
JEL-codes: B50 E12 E25 O40 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1177/0486613419895143

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