Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174420
Authors: 
Razmi, Arslan
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 2017-11
Abstract: 
Evidence regarding the relationship between distribution, demand, and growth in the short run has been mixed. Open economy models that create the possibility of "beggar-thy-neighbor" growth offer one theoretical explanation for why this may be expected. Several authors have argued recently, however, that even if demand and growth are profit-led in many individual countries, the global economy is likely to be wage-led since the planet as a whole runs balanced trade. This paper finds that this argument, although intuitively appealing, does not hold up to careful examination. Although the world economy as a whole is a closed system, it is not isomorphic to a closed economy, thanks to repercussion effects, relative price movements, and cross-country heterogeneity. The effects of global redistribution depend on the nature of its constituent economies.
Subjects: 
Demand regime
income distribution
wage-led growth
neo-Kaleckian open economy models
JEL: 
F43
O41
O11
E12
Document Type: 
Working Paper

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