Income distribution and economic growth regime in Brazil: evaluation and propositions

Abstract

The aim of the article is to empirically analyze the economic growth regimes in Brazil from 2000 to 2015. In theoretical terms, we follow the augmented neo-Kaleckian model proposed by Palley (2016). Therefore, we incorporate in the analysis the role of the personal and functional distribution of income. In empirical terms, we use a vector autoregressive model. The results suggest that the growth regime of the Brazilian economy was wage-led. This means that capital accumulation and aggregate demand were favored by policies to reduce inequality in the labor market and personal income. Based on the results, we discussed the Brazilian model, arguing in favor of adopting a growth model that can reconcile income distribution and export incentive policies.