Distribution, aggregate demand and productivity growth: theory and empirical results for six OECD countries based on a post-Kaleckian model

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractEmpirical research based on the Bhaduri/Marglin-variant of the Kaleckian model has recently shown that aggregate demand in many medium-sized and large open economies tends to be wage-led in the medium to long run, even in a period of increasing globalisation. In this paper we extend this type of analysis and integrate the effects on productivity growth, theoretically and empirically. Productivity growth is introduced into the theoretical model making use of the Verdoorn effect or of Kaldor's technical progress function and hence of a positive relationship between GDP or capital stock growth and productivity growth. Further on, a costpush or Marx/Hicks-effect and hence a positive impact of real wage growth or the wage share on productivity growth is taken into account. In the empirical part we estimate productivity growth equations for six countries introducing these two effects. Finally, economic policy conclusions are drawn.JEL code: E12, E21, E22, E25, O41

Testing the Bhaduri–Marglin model with OECD panel data

“…Also, the productivity regime is found to be wage-led. This conforms to Hein and Tarassow's (2010) finding for the period from the early/mid 1980s to 2007.…”

“…In this case, variations in the rate of capacity utilisation are the same thing as variations in output. Finally, in Naastepad (2006) and Hein and Tarassow (2010) the Verdoorn relation does not appear in the Bhaduri-Marglin 'core' of the model, which is the demand regime, but in the productivity regime. Productivity growth is usually seen as a supply-side phenomenon, influenced by technological progress.…”

“…11 Hein and Tarassow (2010) criticise this equation arguing that the wage share rather than the real wage should be used as cost push variable. However, replacing the growth rate of real wages by the growth rate of the wage to explain the impact of distribution on demand in each short period.…”

“…The short-period orientation of the model has prompted Schütz (2012) to criticise the inclusion of the Verdoorn relation between output growth and productivity growth in the equation for the productivity regime in Naastepad (2006) and Hein and Tarassow (2010). Schütz (2012, p. 313) claims that "(t)he core of this [Verdoorn] concept is related to a structural change in the production process and therefore applies to the long period".…”

“…I therefore do not join Hein and Tarassow (2010) in criticising Naastepad's investment function (Equation 3) for not accounting for technological progress.…”