Demand and distribution in integrated economies

Rezai, Armon (2014) Demand and distribution in integrated economies. Cambridge Journal of Economics, 39 (5). pp. 1399-1414. ISSN 0309-166X


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Aggregate demand is influenced by the functional income distribution of an economy and that of its trading partners. This relationship between income distribution and output is analyzed in a short-run two-country Neo-Kaleckian model. The effects of devaluation and redistribution are discussed in detail. Trade and redistribution within one country interact and output increases or decreases with changes in either depending on the specific distributional and exchange rate movements. The Marshall-Lerner condition is shown to be equivalent to the assumption of expansionary devaluation. If devaluation increases output, national redistribution policy toward wage earners is also more likely to be expansionary. (author's abstract)

Item Type: Article
Additional Information: This is a pre-copyedited, author-produced PDF of an article accepted for publication in Cambridge Journal of Economics following peer review. The version of record is available online at .
Keywords: Open Economy / Adding-Up Constraints / International Macroeconomics / Devaluation / Growth / Distribution
Classification Codes: JEL E12, F15, F32 F41
Divisions: Departments > Sozioökonomie > Ecological Economics
Version of the Document: Accepted for Publication
Variance from Published Version: Minor
Depositing User: Elena Simukovic
Date Deposited: 05 May 2015 07:28
Last Modified: 10 Jan 2017 14:04
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