Wage led aggregate demand in the United Kingdom

Jump, Robert and Mendieta-Munoz, Ivan (2016) Wage led aggregate demand in the United Kingdom. (Discussion Paper) Kingston upon Thames, U.K. : Faculty of Arts and Social Sciences, Kingston University. 25 p. (Economics Discussion Paper, no. 2016-04)

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Abstract

The wage led aggregate demand hypothesis is examined for the United Kingdom over the period 1971 - 2007. Existing studies disagree on the aggregate demand regime for the UK, and this appears to be due to differing empirical approaches. Studies relying on equation-by-equation estimation procedures tend to find support for wage led aggregate demand in the UK, while the single study using systems estimation finds no support for the hypothesis. In order to resolve this incongruity, we test the wage led aggregate demand hypothesis in the UK using VAR models estimated on quarterly data. We use a liberal partial identification strategy based on movements in real earnings rather than in the labour share. The results provide support for the wage led aggregate demand hypothesis during the period of study.

Item Type: Monograph (Discussion Paper)
Uncontrolled Keywords: Real Earnings; Income Distribution; Business Cycles.
Research Area: Economics and econometrics
Faculty, School or Research Centre: Faculty of Arts and Social Sciences (until 2017) > School of Economics, History and Politics (from November 2012)
Depositing User: Andrea Ingianni
Date Deposited: 25 Feb 2016 13:06
Last Modified: 06 Jan 2017 10:13
DOI: 2016-04
URI: http://eprints.kingston.ac.uk/id/eprint/34589

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