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Distribution and Growth in France and Germany: Single Equation Estimations and Model Simulations Based on the Bhaduri/Marglin Model

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  • Eckhard Hein
  • Lena Vogel

Abstract

We analyse the relationship between functional income distribution and economic growth in France and Germany from 1960 until 2005. The analysis is based on a demand-driven distribution and growth model for an open economy inspired by Bhaduri & Marglin (1990), which allows for profit- or wage-led growth. First, we apply a single equation approach, estimating the effects of redistribution on the demand aggregates and summing up these effects in order to obtain the total effect of redistribution on GDP growth. Since interactions between the demand aggregates are omitted from this approach, we also apply a simulation approach taking into account these interactions. In the single equation approach we find that growth in France was wage-led, whereas the effect in Germany was undetermined. The results of the simulation approach, however, suggest that the wage-led nature of growth in France becomes even more pronounced when considering the interactions between the demand aggregates, while in Germany the simulations show a tendency towards wage-led growth in the longer run.

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  • Eckhard Hein & Lena Vogel, 2009. "Distribution and Growth in France and Germany: Single Equation Estimations and Model Simulations Based on the Bhaduri/Marglin Model," Review of Political Economy, Taylor & Francis Journals, vol. 21(2), pages 245-272.
    • Handle: RePEc:taf:revpoe:v:21:y:2009:i:2:p:245-272
    DOI: 10.1080/09538250902834053
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    Cited by:

    1. Hartwig, Jochen, 2015. "Structural change, aggregate demand and employment dynamics in the OECD, 1970–2010," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 36-45.
    2. Daniele Tavani & Luca Zamparelli, 2017. "Government spending composition, aggregate demand, growth, and distribution," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(2), pages 239-258, April.
    3. Joana David Avritzer, 2020. "Estimation of a long run regime for growth and demand through different filtering methods," Working Papers 2004, New School for Social Research, Department of Economics, revised Oct 2020.
    4. Osmar Leandro Loaiza Quintero & Alexander Tobón Arias & Guillermo David Hincapié Vélez, 2017. "The impact of the functional distribution of income on gross domestic product: Colombia, 1970-2011," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 86, pages 63-104, Enero - J.
    5. Bruno Thiago Tomio, 2020. "Understanding the Brazilian demand regime: a Kaleckian approach," Review of Keynesian Economics, Edward Elgar Publishing, vol. 8(2), pages 287-302, April.
    6. Olivier Allain, 2011. "The impact of income distribution on consumption: a reassessment," Post-Print hal-00712657, HAL.
    7. Eckhard Hein & Christian Schoder, 2011. "Interest rates, distribution and capital accumulation -- A post-Kaleckian perspective on the US and Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 693-723, November.
    8. Eckhard Hein & Artur Tarassow, 2010. "Distribution, aggregate demand and productivity growth: theory and empirical results for six OECD countries based on a post-Kaleckian model," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(4), pages 727-754.
    9. Claudio Roberto Amitrano, 2017. "Income Distribution, Productive Structure and Growth in South America," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 64(2), pages 139-168, March.
    10. Jochen Hartwig, 2018. "Wachstumsfolgen von Einkommensungleichheit – Theorie, empirische Evidenz und Politikempfehlungen," Chemnitz Economic Papers 020, Department of Economics, Chemnitz University of Technology.
    11. Hein, Eckhard, 2011. "Distribution, 'financialisation' and the financial and economic crisis: Implications for post-crisis economic policies," IPE Working Papers 09/2011, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    12. Razgūnė Aušra & Lazutka Romas, 2017. "Labor Share in National Income: Implications in the Baltic Countries," Review of Economic Perspectives, Sciendo, vol. 17(2), pages 121-139, June.
    13. Eckhard Hein & Eckhard Achim Truger, 2017. "Opportunities and limits of rebalancing the Eurozone via wage policies," FMM Working Paper 06-2017, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    14. Jochen Hartwig, 2014. "Testing the Bhaduri-Marglin model with OECD panel data," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(4), pages 419-435, July.
    15. Greg Hannsgen, 2014. "Fiscal Policy, Chartal Money, Mark-up Dynamics and Unemployment Insurance in a Model of Growth and Distribution," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 487-523, July.
    16. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    17. Oyvat, Cem & Öztunalı, Oğuz & Elgin, Ceyhun, 2018. "Wage-led vs. profit-led growth: a comprehensive empirical analysis," Greenwich Papers in Political Economy 20951, University of Greenwich, Greenwich Political Economy Research Centre.
    18. Jochen Hartwig, 2013. "Distribution and growth in demand and productivity in Switzerland (1950--2010)," Applied Economics Letters, Taylor & Francis Journals, vol. 20(10), pages 938-944, July.
    19. Loaiza Quintero, Osmar Leandro & Tobón Arias, Alexander & Hincapié Vélez, Guillermo David, 2016. "Impacto de la distribución funcional del ingreso sobre el producto interno bruto de Colombia, 1970-2011," Revista Lecturas de Economía, Universidad de Antioquia, CIE, issue 86, pages 63-104, December.
    20. Michalis Nikiforos & Duncan Foley, 2011. "Distribution and Capacity: Conceptual Issues and Empirical Evidence September," Working Papers 1105, New School for Social Research, Department of Economics.
    21. Eckhard Hein, 2012. "The Macroeconomics of Finance-Dominated Capitalism – and its Crisis," Books, Edward Elgar Publishing, number 14931.
    22. Hein, Eckhard & Truger, Achim, 2013. "Future fiscal and debt policies: Germany in the Context of the European Monetary Union," IPE Working Papers 24/2013, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    23. Michalis Nikiforos & Duncan K. Foley, 2012. "Distribution And Capacity Utilization: Conceptual Issues And Empirical Evidence," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 200-229, February.
    24. Jochen Hartwig, 2013. "Ist Lohnzurückhaltung gut oder schlecht für das Schweizer Wirtschaftswachstum?," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 7(2), pages 33-45, June.
    25. Cárdenas, Luis & Fernández, Rafael, 2020. "Revisiting francoist developmentalism: The influence of wages in the Spanish growth model," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 260-268.

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    More about this item

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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