| Description |
This dissertation explores economic fluctuations in a demand-driven economy. The first chapter scrutinizes the relationship between functional income distribution and aggregate demand for most developed and developing countries. The chapter relies on the Structuralist Goodwin model, which explores the dynamic between functional income distribution and aggregate demand, which produce endogenous business cycles. The panel data regressions show that the global economy exhibits a profit-squeeze distributive regime, i.e., an increase in capacity utilization decreases the profit share. For the demand regime, the results confirm the previous literature showing a profit-led demand, i.e., an increase in the profit share stimulates capacity utilization, except that the global profit-led demand regime is weaker than what previous studies found in many developed countries. The second chapter focuses on another dimension of the distributional conflict that can produce the business cycle: the real exchange rate. Fluctuations in the real exchange rate can interact with exports and create the business cycle, especially when depreciation is contractionary. The time series analysis is implemented on South Korean data. The vector autoregressive (VAR) model is used in order to simultaneously estimate the exchange rate dynamics, or how the real exchange rate reacts to export fluctuations, and the export response, or how exports respond to the real exchange rate fluctuations. The results show that a devaluation is contractionary in South Korea. An exploration of business cycle theory through the lens of economic history is the main focus of the last chapter. This chapter explores the archive of Marriner S. Eccles at the Marriott Library, University of Utah. The main focus is on the controversy between Eccles and Senator Harry F. Byrd from Virginia regarding deficit spending and the New Deal. This controversy reflects how a liberal thinker and conservative thinker understand how an economy functions and the importance of deficit spending. |
