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Estimation of a long run regime for growth and demand through different filtering methods

Joana David Avritzer ()
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Joana David Avritzer: Department of Economics, New School for Social Research

No 2004, Working Papers from New School for Social Research, Department of Economics

Abstract: This paper discusses the possibility of estimating a long run relationship between income distribution and growth. As emphasized by Blecker (2016), the neo-Kaleckian empirical literature has focused on the estimation of a short run relationship. This paper contributes to the debate by looking at a long term relationship through the use of filtering methods. We first estimate the long run component (or "trend" component) of the relevant variables using various types of filters. Second, we run causality tests and frequentist OLS estimations to test for the relationship between the estimated trend components. We find that there is little difference between the results of each filter and there is a significant long run relationship between capacity utilization and, therefore, aggregate demand, and income distribution. This relationship is shown, furthermore, to be positive, in other words, the higher the wage share, the higher is aggregate demand in the long run.

Keywords: Functional income distribution; economic growth; filtering methods (search for similar items in EconPapers)
JEL-codes: E11 E12 C10 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2020-04
New Economics Papers: this item is included in nep-gro, nep-mac and nep-ore
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http://www.economicpolicyresearch.org/econ/2020/NSSR_WP_042020.pdf First version, 2020 (application/pdf)

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