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The interaction of income distribution, aggregate demand and economic growth in the context of European imbalances

The interaction of income distribution, aggregate demand and economic growth in the context of European imbalances

Obst, Thomas (2016) The interaction of income distribution, aggregate demand and economic growth in the context of European imbalances. PhD thesis, University of Greenwich.

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Abstract

Issues of income distribution, economic growth and development are back on the economics research agenda. Different parts of the economic discipline intend to contribute to the understanding of the link between income distribution and growth.

This thesis aims at analysing the interaction of income distribution, aggregate demand and economic growth in the context of European imbalances. It attempts to illuminate the key question whether it is possible to promote higher growth with a more equitable distribution of income in the case of Europe. First, it reviews the theoretical literature on the effect of distribution on growth and empirically estimates a multi-country demand-led growth model. Second, it conducts a critical literature review on the integration of fiscal policy into the Post-Kaleckian distribution and growth model. Third, it estimates the government-augmented model empirically. The time series econometric model applies a single equation approach and uses secondary longitudinal macroeconomic data for fifteen Western European Union countries (EU15) between 1960 and 2012.

The first paper aims to provide new empirical evidence for the EU15. In a second paper, the goal is to integrate government spending and tax policy into the Post-Kaleckian distribution and growth model. Finally, the goal is to empirically estimate the impact of a policy mix that combines wage policies with fiscal policies, based on the new model. The thesis thus brings concerns of equality and targeted public spending to the core of the analysis.

The thesis aimed to make three contributions to the field: First, it provided new empirical estimates for single EU15 countries as well as for a simultaneous decline in the wage share and highlighted whether there is an empirical basis for wage policy coordination. Second, it augmented the Post-Kaleckian model by a government sector and empirically tested it for the EU15 countries, which has previously not been done in the relevant literature. As a related theoretical and policy relevant contribution, the dissertation analysed the impact of a policy mix (wage and fiscal policy) not only on growth but also on investment, budget balance, trade balance and inflation. The empirical research went beyond a country-by-country analysis and integrated cross-country effects of a simultaneous decline in the wage share on demand in the EU15 countries in a unified government augmented model.

Item Type: Thesis (PhD)
Uncontrolled Keywords: income distribution; economic growth; Europe;
Subjects: H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business > Department of International Business & Economics
Last Modified: 26 Apr 2019 10:56
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
URI: http://gala.gre.ac.uk/id/eprint/23733

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