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Distribution, wealth and demand regimes in historical perspective

Engelbert Stockhammer (), Joel Rabinovich () and Niall Reddy

No 14-2018, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: Most empirical macroeconomic research limited to the period since World War II. This paper analyses the effects of changes in income distribution and in private wealth on consumption and investment covering a period from as early as 1855 until 2010 for the UK, France, Germany and USA, based on the dataset of Piketty and Zucman (2014). We contribute to the post-Keynesian debate on the nature of demand regimes, mainstream analyses of wealth effects and the financialisation debate. We find that overall domestic demand has been wage-led in the USA, UK and Germany. Total investment responds positively to higher wage shares, which is driven by residential investment. For corporate investment alone, we find a negative relation. Wealth effects are found to be positive and significant for consumption in the USA and UK, but weaker in France and Germany. Investment is negatively affected by private wealth in the USA and the UK, but positively in France and Germany.

Keywords: historical macroeconomics; demand regimes; Bhaduri-Marglin model; wealth effects; financialisation (search for similar items in EconPapers)
JEL-codes: B50 E11 E12 E20 E21 N10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his, nep-hme, nep-mac and nep-pke
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
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