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Understanding the Brazilian demand regime: A Kaleckian approach

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  • Tomio, Bruno Thiago

Abstract

The empirical literature on Kaleckian growth and distribution models has almost exclusively investigated developed countries. These studies have used varied econometric techniques and estimation methods, but little attention was given to the developing countries. Onaran and Galanis (2013) provide an extensive review on this literature, and they complement it by estimating models for some developing countries. Nevertheless, due to lack of data, they were unable to estimate the model for Brazil. The contribution of this paper is to expand this empirical literature by adding the results that were found for Brazil. Hence, the Brazilian demand regime is analyzed in the period of 1956-2008, with the functional distribution of income data supplied by Adalmir Marquetti (which was developed in a paper by Marquetti et al., 2010). By applying the single-equation technique in the open economy Bhaduri/Marglin model, as outlined in Hein and Vogel (2008), the results of the estimation show that the demand regime in Brazil is wage-led, both domestically and as an open economy. Therefore, increases in the profit share tend to harm the demand. Finally, based on the estimated results and findings, policy implications are drawn.

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  • Tomio, Bruno Thiago, 2016. "Understanding the Brazilian demand regime: A Kaleckian approach," IPE Working Papers 73/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    • Handle: RePEc:zbw:ipewps:732016
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    References listed on IDEAS

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    1. 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.
    2. Adalmir Marquetti & Eduardo Maldonado Filho & Vladimir Lautert, 2010. "The Profit Rate in Brazil, 1953-2003," Review of Radical Political Economics, Union for Radical Political Economics, vol. 42(4), pages 485-504, December.
    3. Carmem Aparecida Feij� & Marcos Tostes Lamonica & Julio Cesar Albuquerque Bastos, 2015. "Accumulation pattern of the Brazilian economy in the 1990s and 2000s," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(1), pages 15-31, January.
    4. Mark Setterfield (ed.), 2002. "The Economics of Demand-Led Growth," Books, Edward Elgar Publishing, number 1864.
    5. Epstein,Gerald A. & Gintis,Herbert M., 2011. "Macroeconomic Policy after the Conservative Era," Cambridge Books, Cambridge University Press, number 9780521148412, January.
    6. Bresser Pereira,Luiz Carlos, 2010. "Globalization and Competition," Cambridge Books, Cambridge University Press, number 9780521144537, January.
    7. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    8. Engelbert Stockhammer & Özlem Onaran & Stefan Ederer, 2009. "Functional income distribution and aggregate demand in the Euro area," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(1), pages 139-159, January.
    9. Marc Lavoie, 2009. "Introduction to Post-Keynesian Economics," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-23548-9.
    10. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(3), pages 479-511, May.
    11. Marc Lavoie & Stockhammer Engelbert, 2013. "Wage-Led Growth: An Equitable Strategy for Economic Recovery," Post-Print hal-01343664, HAL.
    12. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
    13. José Luis Oreiro & Eliane Araujo, 2013. "Exchange Rate Misalignment, Capital Accumulation and Income Distribution Theory and Evidence from the Case of Brazil," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(3), pages 381-396, May.
    14. Onaran, Özlem & Galanis, G., 2013. "Is aggregate demand wage-led or profit-led? A global model," Greenwich Papers in Political Economy 16222, University of Greenwich, Greenwich Political Economy Research Centre.
    15. Eckhard Hein & Engelbert Stockhammer (ed.), 2011. "A Modern Guide to Keynesian Macroeconomics and Economic Policies," Books, Edward Elgar Publishing, number 13962.
    16. Bresser Pereira,Luiz Carlos, 2010. "Globalization and Competition," Cambridge Books, Cambridge University Press, number 9780521196352, January.
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    Cited by:

    1. Jiménez, Valeria, 2020. "Wage shares and demand regimes in Central America: An empirical analysis for Costa Rica, El Salvador, Honduras, Nicaragua, and Panama, 1970-2016," IPE Working Papers 151/2020, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. Fernando Rugitsky, 2017. "The rise and fall of the Brazilian economy (2004-2015): the economic antimiracle," Working Papers, Department of Economics 2017_29, University of São Paulo (FEA-USP).
    3. Jungmann, Benjamin, 2021. "Growth drivers in emerging capitalist economies before and after the Global Financial Crisis," IPE Working Papers 172/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Benjamin Jungmann, 2023. "Growth drivers in emerging capitalist economies: building blocks for a post-Keynesian analysis and an empirical exploration of the years before and after the Global Financial Crisis," Review of Evolutionary Political Economy, Springer, vol. 4(2), pages 349-386, July.
    5. Akcay, Ümit & Hein, Eckhard & Jungmann, Benjamin, 2021. "Financialisation and macroeconomic regimes in emerging capitalist economies before and after the Great Recession," IPE Working Papers 158/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Betül Mutlugün, 2022. "Endogenous income distribution and aggregate demand: Empirical evidence from heterogeneous panel structural vector autoregression," Metroeconomica, Wiley Blackwell, vol. 73(2), pages 583-637, May.
    7. Paul Carrillo‐Maldonado, 2023. "Partial identification for growth regimes: The case of Latin American countries," Metroeconomica, Wiley Blackwell, vol. 74(3), pages 557-583, July.

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    More about this item

    Keywords

    demand-led accumulation regimes; single equation approach; wage-led; Brazil;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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