The mainstream concept of Secular Stagnation provides a comprehensive theoretical picture to explain sluggish economic growth and engenders a renewed role for fiscal policy. For these reasons, it should be praised. Given the difficulties entailed by the theoretical framework in which the theory...

This paper applies a robust empirical methodology, which considers issues relating to cross-country heterogeneity and cross-sectional dependence, to inspect the contributions of gender equality and factor income distribution to an economy's growth path. A dynamic model of aggregate demand is...

We propose a theory of indebted demand, capturing the idea that large debt burdens by households and governments lower aggregate demand, and thus natural interest rates. At the core of the theory is the simple yet under-appreciated observation that borrowers and savers differ in their marginal...

We study optimal monetary policy during temporary supply contractions when aggregate demand has inertia and expansionary policy is constrained. In this environment, it is optimal to run the economy hot until supply recovers. Positive output gaps in the low-supply phase lessen the negative output...

This paper studies the causes of movements in inflation and output in Switzerland over 160 years between 1855 and 2015. Aggregate supply and demand shocks are identified in a structural VAR and their evolution and effect on prices and output is discussed. Shocks to the Swiss economy have...

Supermultiplier growth models show that higher autonomous spending leads to stronger economic growth, implying that greater government spending can boost economic activity (Freitas and Serrano, 2015). However, several authors highlighted the limits of this strategy, arguing that increased...

In this paper, we attempt to support the argument regarding the endogeneity of productivity to effective demand. Unlike most of the works on the topic, we focus on the role that both public investment and public consumption have on productivity. We suggest, at the theoretical level, that public...

The paper investigates how including the distribution of wealth changes the demand effects of redistributing functional income. It develops a model with an endogenous wealth distribution and shows that the endogenous rise in wealth inequality resulting from a redistribution towards profits...

The paper investigates how including the distribution of wealth changes the demand effects of redistributing functional income. It develops a model with an endogenous wealth distribution and shows that the endogenous rise in wealth inequality resulting from a redistribution towards profits...

The mainstream concept of Secular Stagnation provides a comprehensive theoretical picture to explain sluggish economic growth and engenders a renewed role for fiscal policy. For these reasons, it should be praised. Given the difficulties entailed by the theoretical framework in which the theory...

This paper studies the interaction between epidemiological dynamics and the dynamics of economic activity in a demand-driven model in the structuralist/post-Keynesian tradition. On the one hand, rising aggregate demand increases the contact rate and therefore the probability of exposure to a...

We use information in higher-order moments to identify aggregate supply and aggregate demand shocks for the U.S. economy. Traditional methods based on sign restrictions and/or second-order moments yield only “set” or “interval” identification but higher-order moments are shown to...

How can low consumer spending cause an inefficient recession or recovery? We propose a real theory of aggregate demand shortages that does not rely on nominal rigidities. In our theory, an economy can be demand constrained when, i) productivity in the consumption goods sector can be improved or...

This paper examines the shift in the relation between the inflation rate and the rate of growth of real output which has occurred in the United States over the past three decades, and attempts to assess the relative importance of three possible lines of explanation: a) the new classical view of...

Markup cyclicality has been central for debating policy effectiveness and understanding business-cycle fluctuations. However, measuring the cyclicality of markups is as important as understanding the microeconomic mechanisms underlying that cyclicality. The latter requires measurement of...

I revisit the General Theory's discussion of the role of wages in employment determination through the lens of the New Keynesian model. The analysis points to the key role played by the monetary policy rule in shaping the link between wages and employment, and in determining the welfare impact...

While economic theory has been applied to numerous topics in economic history, there are very few attempts to interpret major macroeconomic shocks from the perspective of standard Keynesian theory. This paper presents a history of aggregate demand and supply shocks spanning 1900 - 2016 for the...

We estimate the time-varying distribution of aggregate supply (AS) and aggregate demand (AD) shocks defined in the Keynesian tradition. In modeling the time variation in higher order moments, we distinguish between traditional Gaussian uncertainty and "bad" uncertainty, associated with negative...

This econometric study seeks to determine the most important factors of aggregate demand in Egypt so as to provide insight into how this developing nation can grow economically in the coming years. The Ordinary Least Squares estimation method was used in order to estimate nominal GDP for the...

This paper aims to discuss the theory of productivity growth and its empirical applications, several authors emphasize the impact of real exchange rate devaluation on productivity. The main research question is: does the real exchange rate have a positive or negative impact on productivity...

This paper studies the interaction between epidemiological dynamics and the dynamics of economic activity in a demand-driven model in the structuralist/post-Keynesian tradition. On the one hand, rising aggregate demand increases the contact rate and therefore the probability of exposure to a...

We show that sentiments - self-fulfilling changes in beliefs that are orthogonal to fundamentals - can drive persistent aggregate fluctuations under rational expectations in a beauty contest game. Such fluctuations can occur even in the absence of exogenous aggregate fundamental shocks....

Measured productivity is strongly procyclical. Real business cycle theories suggest that actual fluctuations in productivity are the source of fluctuations in aggregate output. Keynesian theories maintain that fluctuations in aggregate output come from shocks to aggregate demand. Keynesian...

The evidence for a productivity-based explanation for real exchange rate behavior of East Asian currencies is examined. Using sectoral output and employment data, relative prices and relative productivities are calculated for China, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore,...

Using sector-level survey data for the universe of Japanese firms, we establish the positive co-movement in the firm’s expectations about aggregate and sector-specific demand shocks. We show that a simple model with imperfect information on the current aggregate and sector-specific components...

The paper argues that the possibility of demand-led and supply-led growth models to ensure economic growth is limited and states the feasibility of shifting toward an efficiency-based development model. In particular, monetary policy should aim at increasing efficiency in the real sector. For...

We construct a dynamic general equilibrium model in which the typical industry colludes by threatening to punish deviations from an implicitly agreed upon pricing path. We argue that models of this type explain better than do competitive models the way in which the economy responds to aggregate...

There has been a long discussion about the employment impact of minimum wages and this discussion has recently been renewed with the introduction of an economy-wide, binding minimum wage in Germany in 2015. In traditional reasoning, based on the allocational approach of modern labour market...

This paper applies a robust empirical methodology, which considers issues relating to cross-country heterogeneity and cross-sectional dependence, to inspect the contributions of gender equality and factor income distribution to an economy's growth path. A dynamic model of aggregate demand is...

COVID-19 constitutes a health crisis which has rapidly turned into a social and economic crisis. This paper briefly explores some of the issues raised by the combination of a massive supply-side shock with a massive demand-side shock, and the interaction of these with the exponential dynamics of...

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...

We propose a theory of indebted demand, capturing the idea that large debt burdens by households and governments lower aggregate demand, and thus natural interest rates. At the core of the theory is the simple yet under-appreciated observation that borrowers and savers differ in their marginal...

We propose a novel conceptual approach to transparently characterizing credit market outcomes in economies with multi-dimensional borrower heterogeneity. Based on characterizations of securities' implicit demand for bank equity capital, we obtain closed-form expressions for the composition of...

I study optimal monetary policy in the presence of non-fundamental sources of fluctuations. Beliefs about aggregate demand can be self-fulfilling in models departing slightly from the complete information benchmark in the New Keynesian framework. Through its effect on aggregate variables, the...

We extract aggregate demand and supply shocks for the US economy from real-time survey data on inflation and real GDP growth using a novel identification scheme. Our approach exploits non-Gaussian features of macroeconomic forecast revisions and imposes minimal theoretical assumptions. After...