Agnostic Identification for Growth Regimes

To estimate the effect of income distribution on output, this study introduces the zero and signs restrictions methodology of the structural vector autoregressive model. For this purpose, this study follows the Post -Keynesian growth models and identifies the demand regimes in Latin American countries for the period 1960–2014. The main results reveal that Bolivia, Colombia, and Honduras have profit-led regimes, and Costa Rica, Ecuador, Nicaragua, Peru, and Venezuela have wage-led regimes. The regimes of Brazil, Mexico, Panama, and Uruguay could not be determined.

Keywords: Distribution, Growth, Endogeneity bias, SVAR, Latin American economies.