Oyvat, CemOztunali, OguzElgin, Ceyhun2024-07-182024-07-1820200026-13861467-999Xhttps://doi.org/10.1111/meca.12284https://hdl.handle.net/11411/7853This study investigates various economic factors' impact in determining the relationship between functional income distribution and aggregate demand from both a theoretical and an empirical viewpoint. We base our analysis on a demand-driven growth model for an open economy that allows for either profit-led or wage-led regimes. Our results strongly indicate that a higher level of trade openness is associated with a lower probability of being wage-led. We find evidence that lower wage inequality makes an economy more wage-led and that countries with a greater private credit-to-gross domestic product (GDP) ratio are more likely to be profit-led.eninfo:eu-repo/semantics/openAccessDemandDistributionEconomic GrowthKeynesian EconomicsTrade OpennessFunctional Income-DistributionAggregate DemandBhaduri-MarglinGrowth TheoryDebtEconomyFinancializationProductivityConsumptionInequalityArticle2-s2.0-8508093807510.1111/meca.122844863Q245871Q3WOS:000541011500001