Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/228591 
Year of Publication: 
2020
Series/Report no.: 
Working Paper No. 151/2020
Publisher: 
Hochschule für Wirtschaft und Recht Berlin, Institute for International Political Economy (IPE), Berlin
Abstract: 
This paper analyzes the relationship between functional income distribution aggregate demand and economic growth in five Central American countries; Costa Rica, El Salvador, Honduras, Nicaragua, and Panama for the period 1970-2016. It estimates the effects of a change in the wage share on aggregate demand based on a post-Kaleckian model, which allows for either profit- or wage-led demand. The results show that the domestic demand is wage-led in the five countries. The same applies for total demand with the exception of Panama, whose domestically wage-led demand turns profit-led when including the effect of distribution on net exports. Finally, it is argued that there is room for a wage-led recovery in Central America.
Subjects: 
distribution
aggregate demand
wage share
demand regimes
consumption
investment
net exports
developing countries
Central America
JEL: 
E12
E22
E23
E25
E61
F41
Document Type: 
Working Paper

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