HOME » wiiw Working Papers » An Empirical Characterization of ...
What are the economic effects of redistributing one dollar from profits to labour income? We address this question for the post-World War II economies of the United States and Canada within a structural VECM procedure allowing for up to two breaks of unknown timing. In the United States the short-run spending effect on growth, set in motion by higher labour income, is strong enough to make such a redistribution an attractive, maybe provocative, policy alternative. Across the border in Canada, however, the negative medium-run capacity effect, brought about by diminished profits, dominates the picture more or less from the beginning and output slumps considerably, a result actually suggesting a - maybe even more provocative - redistribution towards profits. We discuss several possible explanations such as the formation of expectations and the different exposure to international trade. Methodologically, we provide a novel procedure to estimate cointegrating rank and break dates jointly.
wiiw Working Papers
(free PDF download)
 |
An Empirical Characterization of Redistribution Shocks and Output Dynamics (by Klemens Hauzenberger and Robert Stehrer) wiiw Working Paper No. 68, August 2010 47 pages including 6 Tables and 4 Figures FREE DOWNLOAD
Keywords: redistribution, structural VECM, joint estimation of cointegrating rank and multiple break dates JEL classification: C32, C53, E12, E25 Countries covered: Canada, USA Topics: Macroeconomic Analysis and Policy |
Add to cartWhat are the economic effects of redistributing one dollar from profits to labour income? We address this question for the post-World War II economies of the United States and Canada within a structural VECM procedure allowing for up to two breaks of unknown timing. In the United States the short-run spending effect on growth, set in motion by higher labour income, is strong enough to make such a redistribution an attractive, maybe provocative, policy alternative. Across the border in Canada, however, the negative medium-run capacity effect, brought about by diminished profits, dominates the picture more or less from the beginning and output slumps considerably, a result actually suggesting a - maybe even more provocative - redistribution towards profits. We discuss several possible explanations such as the formation of expectations and the different exposure to international trade. Methodologically, we provide a novel procedure to estimate cointegrating rank and break dates jointly.
Visitors who downloaded this publication/presentation also downloaded:
|
Reforming innovation systems in BY, KAZ and UA: Lost in Transition/Translation?” (by Hannes Leo) wiiw Seminar, 15 October 2012, 5 p.m., Venue: wiiw, Rahlgasse 3, 1060 Vienna DETAILS |
|
The effects of technology and offshoring on changes in employment and the task-content of occupations (by Semih Akcomak, Suzanne Kok and Hugo Rojas-Romagosa) wiiw Seminar in International Economics 18 October 2012, 4 p.m., Venue: wiiw, 1060 Vienna, Rahlgasse 3 DETAILS |
|
What went wrong in Slovenia and how to get out of the mess? (by Joze P. Damijan) wiiw Seminar Series 'EU in Crisis' 08 October 2012, 5 p.m., Venue: wiiw, 1060 Vienna, Rahlgasse 3 DETAILS |
