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Globalization and the effects of changes in functional income distribution on aggregate demand in Germany

Stockhammer, Engelbert and Hein, Eckhard and Grafl, Lucas (2007) Globalization and the effects of changes in functional income distribution on aggregate demand in Germany. Department of Economics Working Paper Series, 114. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.

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Abstract

Germany has experienced a period of extreme nominal and real wage moderation since the mid 1990s. Contrary to the expectations of liberal economists this has failed to improve Germany's mediocre economic performance. However, Germany is now running substantial current account surpluses. One possible explanation for Germany's disappointing performance is found in Kaleckian theory, which highlights that the domestic demand effect of a decline in the wage share will typically be contractionary, whereas net exports will increase (Blecker 1989). The size of the foreign demand effect will critically depend on the degree of openness of the economy. The paper aims at estimating the demand side of a Bhaduri-Marglin (1990) -type model empirically for Germany. The paper builds on the estimation strategy of Stockhammer, Onaran and Ederer (2007) and Hein and Vogel (2008a, 2008b). The main contribution lies in a careful analysis of the effects of globalization. Since Germany is a large open economy by now it is a particularly interesting case study. (author´s abstract)

Item Type: Paper
Keywords: distribution / demand / investment / consumption / foreign trade / macroeconomics / Keynesian economics / Germany / globalization
Classification Codes: RVK QG 215 ; JEL E12, E20, E22, E25, E61
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 14 Dec 2007 10:02
Last Modified: 15 Oct 2011 02:25
URI: http://epub.wu.ac.at/id/eprint/1104

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