Distribution and demand in Brazil: empirical evidence from the structural and aggregative approaches

Abstract

This paper examines the relationship between functional income distribution, aggregate demand and capacity utilization for the Brazilian economy between 2000 and 2015. Therefore, we take on two different theoretical perspectives in the empirical exercises: (i) under the structural perspective, we analyze the effects of the wage share on the components of aggregate demand; and (ii) from an aggregative perspective, we evaluated the cyclical relationship between the demand curve and the distribution curve. The results differ according to the theoretical view: the first approach indicated that aggregate demand assumed a wage-led pattern with negative effects on investment (conflicting-stagnationism), while the second one showed a profit-squeeze distribution regime.

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