Demand and Distribution in Integrated Economies

Publication: Working/Discussion PaperWU Working Paper

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Abstract

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)
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Pages1399-1414
Volume39
DOIs
Publication statusPublished - 2016

Publication series

SeriesEcological Economic Papers
Number10

WU Working Paper Series

  • Ecological Economic Papers

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