Redistribution in a neo-Kaleckian two-country model

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Publication Type pre-print
School or College College of Social & Behavioral Science
Department Economics
Creator Von Arnim, Rudiger Lennart
Other Author Tavani, Daniele; Carvalho, Laura
Title Redistribution in a neo-Kaleckian two-country model
Date 2014-01-01
Description We investigate the interaction between demand-driven growth and income distribution in open economies, by combining expenditure-switching and demand spillover effects in a neo-Kaleckian two country model. First, we specify elasticities of wage share and real exchange rate to the money wage relative to labor productivity, in order to precisely describe the distributive pass{through from money wages to the labor share and the real exchange rate. Second, we analyze the demand effects of an increase in the money wage for given labor productivity (a redistribution toward labor) in both Home and Foreign country, as well as globally. We derive closed form results for two identical countries. These results indicate that redistribution towards labor at Home: (i) always increases growth globally if Home is wage-led, but can lead to lower growth at Home relative to Foreign; (ii) will always imply lower growth at Home relative to Foreign if Home is prot{led, but can still be growth-enhancing at Home. Thus, to the extent that countries are concerned with their relative economic performance, a fallacy of com-position can emerge. Numerical simulations suggest that these fallacies could indeed occur. As a consequence, "returns to coordination" over international labor policies might be substantial.
Type Text
Publisher Wiley-Blackwell
First Page 1
Last Page 30
Language eng
Bibliographic Citation Von Arnim, R., Tavani, D., & Carvalho, L. (2014). Redistribution in a neo-Kaleckian two-country model. Metroeconomica, 1-30.
Rights Management (c) Wiley-Blackwell The definitive version is available at www3.interscience.wiley.com ; This is the pre-peer reviewed version of the following article: Von Arnim, R., Tavani, D., & Carvalho, L. (2014). Redistribution in a neo-Kaleckian two-country model. Metroeconomica, 1-30 which has been published in final form at DOI: 10.1111/meca.12047 ; http://onlinelibrary.wiley.com/doi/10.1111/meca.12047/pdf
Format Medium application/pdf
Format Extent 1,737,047 bytes
Identifier uspace,18529
ARK ark:/87278/s6905cvz
Setname ir_uspace
Date Created 2014-04-25
Date Modified 2021-05-06
ID 712498
Reference URL https://collections.lib.utah.edu/ark:/87278/s6905cvz
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