Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98605
Authors: 
Kiefer, David
Rada, Codrina
Year of Publication: 
2013
Series/Report no.: 
Working Paper, University of Utah, Department of Economics 2013-05
Abstract: 
We explore four decades of cyclical and long-run dynamics in income distribution and economic activity for a panel of thirteen OECD countries, as measured by the wage share and the output gap. When modeled as a Goodwin model, our results suggest that economic activity is weakly profit-led and that the wage share is pro-cyclical. Our estimated model is dynamically stable and has a long-run equilibrium in distributionutilization space. An extension of the model suggests that this equilibrium has been shifting south-west towards a lower wage share and a loss of economic activity. This finding is suggestive of a coordination failure among industrialized nations; it could be that the governments of these countries are engaging in a race to the bottom in terms of the wage share; it may even be that this race has the undesirable consequence of decreasing economic efficiency.
Subjects: 
predator-prey models
distributive-demand dynamics
panel data estimation
JEL: 
D3
C23
C61
Document Type: 
Working Paper

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