Demand and distribution in integrated economies

Rezai, A. (2015). Demand and distribution in integrated economies. Cambridge Journal of Economics 39 (5) 1399-1414. 10.1093/cje/beu060.

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Aggregate demand is influenced by the functional distribution of income of an economy and that of its trading partner. The relationship between income distribution and output is analysed 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 evaluation. If devaluation increases output, national redistribution policy towards wage earners is also more likely to be expansionary.

Item Type: Article
Uncontrolled Keywords: adding-up constraints; devaluation; distribution; growth; international macroeconomics; open economy
Research Programs: Risk & Resilience (RISK)
Risk, Policy and Vulnerability (RPV)
Bibliographic Reference: Cambridge Journal of Economics; 39(5):1399-1414 [September 2015] (Published online 30 November 2014)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:53
Last Modified: 27 Aug 2021 17:39

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