Demand and income distribution: an analysis of the Brazilian economic growth between 1993-2013

Abstract

This work aims to empirically investigate Brazilian economic growth from 1993 through 2013. It is based on Naastepad's model, which determines whether the demand-led growth is wage-led or profit-led. Thus, in order to determine the demand regime of the period, we estimated the equations for investment, exports and aggregate propensity to save. Estimating the equations allowed us to calculate the multiplier effect and investment and export elasticity effect. The demand regime in the period was wage-led, mostly due to low participation of investments and exportations in the national income. All equations were estimated by Ordinary Least Squares and showed robust standard deviation of parameters. The statistical tests, carried out after the estimation, suggest an unbiased and consistent model.

Keywords:
Income distribution; Aggregate demand; Economic growth