Concentration of Income and Slow Growth in America Latina

Friday, 3 July 2015: 4:00 PM-5:30 PM
TW1.2.02 (Tower One)
Albino Luna, UNAM, Mexico City, Mexico
Gustavo Vargas, UNAM, Mexico City, Mexico
The goal of this paper is to test the hypothesis of the most of America Latina´s countries slow-growth, it’s explained not only by the monetary variables and the political economy of financial equilibrium, but fundamentally by the real variables, like the private investment performance and income concentration; displayed in slow-growth aggregated demand.

Our hypothesis is: the weak growth of American Latina economies is a result of the low dynamism of investment, and it is associated to the profit performance in an economy in a process of structural change. The strategy of neoliberal policies applied for thirty years has fallen into its own trap: by favoring corporate profits and business classes, have neglected the growth of the domestic effective demand and social welfare. This hypothesis is supported by the Post-keynesian and Kalecki’s theory.

This paper uses a combination of methodologies designed for the analysis of time series: the cointegration methodology of Johansen (1988) determines the presence of at least one co-integrating vector, showing the existence of a long-term relationship between the variables and on the other hand, the methodology of vector autoregressive (VAR) analyzes short-term relations between them. The countries analyzed are Argentina, Brazil, Colombia, Chile and Mexico. This research has verified the relevance of the Post-Keynesian and Kalecki’s theory, and our hypothesis