Demand and Distribution in Integrated Economies

Rezai, Armon (2016) Demand and Distribution in Integrated Economies. Ecological Economic Papers, 10. WU Vienna University of Economics and Business, Vienna.


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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: Paper
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: Published
Variance from Published Version: Minor
Depositing User: Karin Lagger
Date Deposited: 27 Jan 2016 13:27
Last Modified: 22 Oct 2019 00:41
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