This paper deals with two intrinsically linked issues: the endogeneity of the demand regime and the personal distribution impact on aggregate demand. By assuming that saving is a function of personal rather than functional income distribution, an increase of the labour share is effective in boosting consumption and aggregate demand, not per se, but only as long as it reduces personal inequality. As the labour share increases, both the demand regime type—the sign of the slope of the demand schedule—and its strength—the size of the slope of the demand schedule - can endogenously change. Concerning the former, there can be a threshold value for the wage share beyond which there is a shift from wage-led to profit-led demand. The analysis shows that, unlike most Kaleckian models, profit inequality is just as important as wage inequality in determining the demand regime type and its strength.

Personal income distribution and the endogeneity of the demand regime / Tonni, Lorenzo. - In: CAMBRIDGE JOURNAL OF ECONOMICS. - ISSN 1464-3545. - (2023). [10.1093/cje/beac059]

Personal income distribution and the endogeneity of the demand regime

Lorenzo Tonni
2023

Abstract

This paper deals with two intrinsically linked issues: the endogeneity of the demand regime and the personal distribution impact on aggregate demand. By assuming that saving is a function of personal rather than functional income distribution, an increase of the labour share is effective in boosting consumption and aggregate demand, not per se, but only as long as it reduces personal inequality. As the labour share increases, both the demand regime type—the sign of the slope of the demand schedule—and its strength—the size of the slope of the demand schedule - can endogenously change. Concerning the former, there can be a threshold value for the wage share beyond which there is a shift from wage-led to profit-led demand. The analysis shows that, unlike most Kaleckian models, profit inequality is just as important as wage inequality in determining the demand regime type and its strength.
2023
personal distribution; functional distribution; wage-led; profit-led; endogenous demand regime
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Personal income distribution and the endogeneity of the demand regime / Tonni, Lorenzo. - In: CAMBRIDGE JOURNAL OF ECONOMICS. - ISSN 1464-3545. - (2023). [10.1093/cje/beac059]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1673513
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