Functional Distribution of Income and Economic Activity in Croatia: Post-Keynesian Approach

Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 32, No. 1, 2014, pp. 53-73

21 Pages Posted: 25 Jan 2015

See all articles by Boris Vujčić

Boris Vujčić

Croatian National Bank; University of Zagreb - Faculty of Business and Economics

Milan Deskar-Škrbić

Erste&Steiermarkische bank

Zvonimir Ratkovski

Deloitte Coatia

Jurica Zrnc

Zagreb School of Economics and Management

Multiple version iconThere are 2 versions of this paper

Date Written: June 17, 2014

Abstract

The aim of this paper is to quantify the effects of changes in functional income distribution on selected macroeconomic variables in Croatia in period from 2000-2012. We use structural VAR approach with identification scheme based on a priori restrictions that are derived from theoretical framework of Post-Keynesian macroeconomic model. Our main hypothesis, which is confirmed in the empirical analysis, is that the accumulation of capital in Croatia was primarily determined by income from labor, i.e. that Croatia had wage-led accumulation. We also found that labor market dynamics was dominantly influenced by demand side shocks and that positive effects of the rise in exports, resulting from the gain in competitiveness (after reducing wage share in income) outweigh negative effects of weaker demand on the capacity utilization. So in our opinion export share increase should become policy priority, as domestic demand is currently constrained by high private and public debt levels. To the extent that increase in exports might require decline in the relative share of labor, negative impact on the investments in non-tradable sector would need to be offset with higher investments in tradable sector of Croatian economy.

Keywords: functional distribution of income, Post-Keynesian macroeconomic model, Croatian economy, SVAR

JEL Classification: E12, E21, E25

Suggested Citation

Vujčić, Boris and Deskar-Škrbić, Milan and Ratkovski, Zvonimir and Zrnc, Jurica, Functional Distribution of Income and Economic Activity in Croatia: Post-Keynesian Approach (June 17, 2014). Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 32, No. 1, 2014, pp. 53-73, Available at SSRN: https://ssrn.com/abstract=2554640

Boris Vujčić (Contact Author)

Croatian National Bank ( email )

Croatia

University of Zagreb - Faculty of Business and Economics

Trg maršala Tita 14
Zagreb
Croatia

Milan Deskar-Škrbić

Erste&Steiermarkische bank ( email )

Ivana Lučića 2
Croatia

Zvonimir Ratkovski

Deloitte Coatia ( email )

Innoovation and Growth
30 Rockefeller Plaza
New York, NY 10112
United States

Jurica Zrnc

Zagreb School of Economics and Management ( email )

Jordanovac ulica 110
Zagreb, 10000
Croatia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
18
Abstract Views
470
PlumX Metrics