Profit maximising goes global: the race to the bottom

Kiefer, David M.; Rada, Codrina

doi:10.1093/cje/beu040

Cited by 113 publications

(84 citation statements)

References 20 publications

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“…We will take a closer look at the results in Barbosa-Filho and Taylor (2006), because that paper has been the starting point for several other papers (Carvalho and Rezai 2016;Kiefer and Rada 2015) and Stockhammer and Stehrer (2011) The model is estimated for the US economy using quarterly data and the cyclical component of the Hodrick-Prescott (HP) filter. The specification uses two lags and no contemporaneous effects to avoid endogeneity problems.…”

Section: Some Comments On the Empirical Literaturementioning

confidence: 99%

“…The discussion then implies that the wage-led demand and counter-cyclical wage share is what Kaleckians must have assumed (Diallo et al 2011;Kiefer and Rada 2015). The alternative, in this view, thus is Goodwin cycles versus anti-Goodwin cycles.…”

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confidence: 93%

“…This can be found, for example, in Diallo et al (2011, fig. 5) and Kiefer and Rada (2015, fig. 2), and is illustrated in Figure 1.…”

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confidence: 96%

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Untitled

2017

ROKE

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The Bhaduri-Marglin model has become a widely used workhorse model in heterodox macroeconomics and has given rise to two dozen or so empirical studies, which at times have given conflicting results. Neo-Kaleckians and neo-Goodwinians have applied different estimation strategies, with the former typically estimating behavioural equations, while the latter have often used reduced-form demand equations. Further differences include the lag structure, the output measure, the control variables and the sample. This paper, first, tries to clarify the terms of the debate. While neo-Kaleckians interpret the model as a mediumterm, partial-equilibrium goods market model, neo-Goodwinians are interested in the interaction of demand and distribution and regard the model as a long-run model with short-run cycles. Second, we elaborate a Kaleckian-Minskyan view of the economy as characterised by a wage-led demand regime and cycles driven by financial fragility. Many of the reported results may suffer from omitted variable bias as they do not include financial control variables. At least in the recent past, financial effects on demand have been much larger in size than distribution effects. A wage-led Minsky model with a reserve-army distribution function gives rise to pseudo-Goodwin cycles.

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Section: Some Comments On the Empirical Literaturementioning

confidence: 99%

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confidence: 93%

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2017

ROKE

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“…Integrating an economy in a regional or world trade network can lead to the increase of income in all countries, but not necessarily so. This highlights the need of international coordination of economic policy (see also von Arnim et al, 2014;Kiefer and Rada, 2014).…”

Section: Introductionmentioning

confidence: 97%

Demand and distribution in integrated economies

Rezai

2014

CAMECO

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Aggregate demand is influenced by the functional income distribution of an economy and that of its trading partners. This relationship between income distribution and output is analyzed in a short-run two-country Neo-Kaleckian model. The effects of devaluation and redistribution are discussed in detail. Trade and redistribution within one country interact and output increases or decreases with changes in either depending on the specific distributional and exchange rate movements. The Marshall-Lerner condition is shown to be equivalent to the assumption of expansionary devaluation. If devaluation increases output, national redistribution policy toward wage earners is also more likely to be expansionary.

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“…Many studies have found that most countries have wage-led domestic demand and the larger economies have wage-led overall demand, although some smaller or more open economies have profit-led demand once foreign trade is taken into account (for example, Hein and Vogel 2008;Stockhammer et al 2009;Onaran and Galanis 2012;Stockhammer and Wildauer 2015). Nevertheless, several studies have found that the US has profit-led demand (for example , Fernandez 2005;Barbosa-Filho and Taylor 2006;Storm and Naastepad 2012), while Kiefer and Rada (2015) find that a panel of 13 OECD countries exhibits profit-led demand.…”

Section: Introductionmentioning

confidence: 99%

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2016

ROKE

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Profit maximising goes global: the race to the bottom

Cited by 113 publications

References 20 publications

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Demand and distribution in integrated economies

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