Egalitarian Policies, Effective Demand, and Globalization: Considering Budget Constraint

Abstract

This paper examines the effectiveness of redistribution policies under budget constraint considering government spending for the productivity improvement as Bowles (2012) and effective demand based on Abe (2015). It shows that an asset-based redistribution policy is not always effective under effective demand and budget constraint. However, the increase of effective demand because of income distribution improves employment, labor productivity, and wage rates because of increased government spending for productivity improvement as the results of saving rate from profit income show.