Tonni, Lorenzo (2023): Business cycle and factor income shares: a VAR sign restrictions approach.
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Abstract
The paper first provides a comprehensive literature review of the theories explaining the cyclical interaction between factor shares and economic activity. Secondly, it assesses if empirical evidence supports those theories, 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.
Item Type: | MPRA Paper |
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Original Title: | Business cycle and factor income shares: a VAR sign restrictions approach |
Language: | English |
Keywords: | factor shares, business cycle, labor share, VAR, sign restrictions |
Subjects: | C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles |
Item ID: | 118194 |
Depositing User: | Lorenzo Tonni |
Date Deposited: | 09 Aug 2023 13:23 |
Last Modified: | 09 Aug 2023 13:23 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/118194 |
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Business cycle and factor income shares: a VAR sign restrictions approach. (deposited 28 Feb 2023 07:33)
- Business cycle and factor income shares: a VAR sign restrictions approach. (deposited 09 Aug 2023 13:23) [Currently Displayed]