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Estimation of a long run regime for growth and demand through different filtering methods

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  • Joana David Avritzer

    (Department of Economics, New School for Social Research)

Abstract

This paper discusses the possibility of estimating a long run relationship between income distribution and growth. As emphasized by Blecker (2016), the neo-Kaleckian empirical literature has focused on the estimation of a short run relationship. This paper contributes to the debate by looking at a long term relationship through the use of filtering methods. We first estimate the long run component (or "trend" component) of the relevant variables using various types of filters. Second, we run causality tests and frequentist OLS estimations to test for the relationship between the estimated trend components. We find that there is little difference between the results of each filter and there is a significant long run relationship between capacity utilization and, therefore, aggregate demand, and income distribution. This relationship is shown, furthermore, to be positive, in other words, the higher the wage share, the higher is aggregate demand in the long run.

Suggested Citation

  • 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.
    • Handle: RePEc:new:wpaper:2004
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    References listed on IDEAS

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    Cited by:

    1. Mark Setterfield & Joana David Avritzer, 2020. "Hysteresis in the normal rate of capacity utilization: A behavioral explanation," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 898-919, November.

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    More about this item

    Keywords

    Functional income distribution; economic growth; filtering methods;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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