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- Title
Demand and distribution in integrated economies.
- Authors
Rezai, Armon
- Abstract
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 devaluation. If devaluation increases output, national redistribution policy towards wage earners is also more likely to be expansionary.
- Subjects
INCOME inequality; KALECKIAN Model of Growth &; Distribution; FOREIGN exchange rates; BUSINESS partnerships; FREE trade; ECONOMIC development
- Publication
Cambridge Journal of Economics, 2015, Vol 39, Issue 5, p1399
- ISSN
0309-166X
- Publication type
Article
- DOI
10.1093/cje/beu060