Wage‐led versus profit‐led demand: a comprehensive empirical analysis
Cem Oyvat (),
Oğuz Öztunalı and
No 27870, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre
This study investigates various economic factors’ impact in determining the relationship between functional income distribution and aggregate demand from both a theoretical and an empirical viewpoint. We base our analysis on a demand‐driven growth model for an open economy that allows for either profit‐led or wage‐led regimes. Our results strongly indicate that a higher level of trade openness is associated with a lower probability of being wage‐led. We find evidence that lower wage inequality makes an economy more wage‐led and that countries with a greater private credit‐to‐gross domestic product (GDP) ratio are more likely to be profit‐led.
Keywords: demand; distribution; economic growth; Keynesian economics; trade openness (search for similar items in EconPapers)
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Published in Metroeconomica 3.71(2020): pp. 458-486
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Journal Article: Wage‐led versus profit‐led demand: A comprehensive empirical analysis (2020)
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