Logo
Munich Personal RePEc Archive

Business cycle and factor income shares: a VAR sign restrictions approach

Tonni, Lorenzo (2023): Business cycle and factor income shares: a VAR sign restrictions approach.

Warning
There is a more recent version of this item available.
[thumbnail of MPRA_paper_116527.pdf]
Preview
PDF
MPRA_paper_116527.pdf

Download (1MB) | Preview

Abstract

This paper has a twofold objective. Firstly, to provide a comprehensive literature review of the theories that explain the cyclical interaction between factor shares and economic activity. Secondly, to assess if there is empirical evidence supporting these theories while overcoming the strong criticalities present in the current empirical literature. To this end, a Bayesian VAR identified with sign restrictions is set up. The results suggest that countercyclical fluctuations in the labor share are mainly driven by the pro-cyclicality of labor productivity - consistent with overhead costs and risk distribution theories - and by the Phillips Curve effects upheld by Goodwin. The model does not support the expansive effect of a capital share rise suggested by Goodwin. In contrast, there is partial evidence favoring the biased technical change theory.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.