Southeast Asian Studies, Vol. 23, No.2, September 1985

Macro-implications of Income Redistribution in Thailand
Bandid NIJATHAWORN*

I The Preliminaries
By international standards, the performance of the Thai economy since theinception of the First Development Plan isimpressive in terms of growth. The real
per capita GDP growth rate between 1961
and 1980 averages 4.6 percent per annum,a rate comparable to that of Brazil. Available empirical evidence, however, showsthat there has been a deterioration in the
distribution of income accompanying what
otherwise appears to be a notable economic
achievement. A recent report by the WorldBank shows that substantial poverty exists
in Thailand. 1) Using poverty lines of Baht
200 per head per month for urdan areas
and Baht 150 for rural areas, the report
estimates the number of people subsistingin poverty was as many as nine million in
1976. This scale of poverty is not necessary for a country with Thailand's average
income. A simple division of national
income by population reveals that the presently available output, equally shared, ismore than sufficient to provide every Thaiwith an adequate income. Instead, povertyof this magnitude indicates that Thailand
has a severe distribution problem.

In recent years, there has been a resurgence of interest in the examination of
growth and income distribution issues fordeveloping countries. 2 ) One aspect of thisexamination focuses on the plausibility andthe effectiveness of income redistribution
as a development policy. Two approaches
can be identified regarding methodology.
The first approach, which is related to theworks of Ballentine and Soligo, Chinn, andPashrdes, employs a static input-output
framework to identify the probable implications of a hypothetical income redistribution. This type of analysis deals primarily
with the first round effect of income
redistribution, i. e., income distribution istaken to be exogenous and is manipulated
to trace its implications for demand, output
growth and employment. The second approach, which is more elaborated, involves
a construction of macroeconomic models inwhich income distribution is endogenized
explicitly. The implications of a redistribution policy are assessed by considering
the first round effects and the generalTheequilibrium effects simultaneously.
models constructed for this type of analysis
are in the tradition of computable generalequilibrium models of Adelman and Robinson, Taylor, De melo, and Dixon.

* Faculty of Economics, Thammasat University,
1)

Bangkok 10200, Thailand
See World Bank [1977: Chapter 4].

2) For a review of these studies see Cline [1975 :
359-400].
193

The purpose of this short paper is to
explore. at an empirical level. the firstround effects of a hypothetical income
redistribution policy for Thailand. The
analysis employs an extended input-output
framework. Simulation of distributionalchanges is implemented and the probable
first round implication of income redistribution for demand. growth and employment
are identified. The findings from thisstudy are taken as a basis for developmentof a CGE growth-cum-distribution modelof the Thai economy.
The paper is organized into four sections. The first section is this introductory
section. Theoretical issues regarding theeffect of income redistribution are reviewed
briefly in Section II. Section III presents
the input-output model and its empiricalconfiguration. The main aspects of thisfindings are summarized in Section IV.

II Theoretical Issues Regarding
the Growth Etfects of Income
Redistribution
In the literature. there exist two diametrically opposed views on the growth effects
of income redistribution in the context ofdeveloping economies. The first is thatof the neo-classical school. the proponentsof which advocate a trade-off between
growth and income distribution under adistribution-neutral policy. According tothis view. a redistribution of income fromthe rich to the poor is likely to jeopardize
economic growth through (a) a general
reduction in aggregate savings and (b) arecomposition of sectoral output away from
194

capital goods III favour of consumption
goods. thereby reducing capital formation.
Broadly. it is argued that redistribution ofincome in favour of the poor would increase
the demand for basic goods generally
consumed by the poor. thus inducing
expansion in the demand-oriented sectors.
This expansion. in turn. would initiate
resource reallocation in favour of thedemand-oriented sectors and away from
capital goods-producing sectors. In the
short run. the expansion in demand could be
choked off by price increases because theincreased demand would not be immediately met. Over a period of time. productive
capacities of the demand-oriented sectors
would expand but at the cost of stagnationin the capacities of the capital goods
sectors. Furthermore. the increased demandfor basic goods could cause a decline inexports as domestic consumption is likely tocompete with exports. This decline would
be damaging to the economy's balance of
payments as well as to the economy's ability
to buy imported capital goods.
Contrary to the above view is the viewof the structuralist school who argue that.
under the trade-off hypothesis. the positiveeffects of income redistribution have beenvery much understated. It is argued thatthe growth-equity trade-off is operative
only under a situation of full employment.
a situation which is rarely observed indeveloping countries. If the resources are
fully utilized. the more they are devoted to
producing basic consumption goods. theless they are available for producing capital
goods. But in developing countries. there
is a possibility of both consumption andB. NI]ATHAWORN : Macro-implications of Income Redistribution in Thailand

investment expansion because the resources
are underutilized. The main contention isthat, as income distribution influences thepattern of demand and the composition of
output, the shift of income in favour of

it involves an examination of the demand
patterns of rich and poor households, theassociated import and labour intensities of
their consumption bundles, and the likely
effects which income redistribution may

the poor would lead to the reallocationof consumption expenditure in favour ofconsumption goods with low income elasticities. These goods are generally more

have on them. These properties can be
integrated within a static input-output
framework.

labour intensive, and are produced with

III. 1 The Model
The model employed to test the above
hypotheses begins with the Leontief static
model of the form

a relatively less import content comparedwith luxuries. Therefore, income redistribution would determine not only the
supply of basic goods and services throughoutput recomposition, but it could be crucial for establishing a pattern of economic
growth that promotes labour absorption
as well as lessens the burden of importrequirements.
The views presented above offer a number of testable hypotheses regarding thefirst round effects of an income redistribution policy. In the context of a developing
country, the net effect of income redistribution would depend on whether the forces
hindering growth outweighs the forcesencouraging growth, and vice versa. An
empirical determination of these effects
are possible with the help of an extended
input-output model.

III Empirical Verification of theEffects of Income Redistribution Policy in Thailand
The present availability of macroeconomic data in Thailand makes it possible
for the above hypotheses to be empiricallytested. This is attempted below. Basically,

X= (l-A)-lF(1)

where X is an n by 1 vector of gross
output, (l- A) -1 is the domestic Leontief
technology inverse, and F is the vector of
final demands. Since we are interested
in the effect of demand recomposition
on consumption initiated by an income
redistribution, the vector F is replacedby vector CD, a vector representing thedomestic consumption component of final
demands. This gives the Leontief modelof the form:(2)

Let C be an n + 1 by 1 vector of household consumption by commodity whichis partitioned by source of supply into
domestic and import components, i. e., CD
and CM. Treating imports as noncompetitive, CD is an· n by 1 vector of consumption
commodities which are supplied domestically and CM is a single cell entry representing the import content of C.
The reported data on household consumption usually classify consumption by195

category of expenditure. In order to trace
the implications of a change in household
consumption for production and employment, a mapping between consumption bycommodity and consumption by category of
expenditure is required. This mapping isachieved through the use of a commodityconversion matrix.
Let CH be an m by ] vector of household
consumption by type of expenditure whose
elements C,/ (j=] ...... m) refer to expenditure on the j consumption category. The
origin of commodity supply can be identified via a commodity-conversion matrix
T of the form:(3)

The matrix T is of the order n + 1 by m.
The elements of T indicate the commodity
composition of consumption expenditure.
In full, equation (3) may be written as:

6~= T"tCr + T ...C: + ...... + TnmC:(4)

CM = T,,+t.tCr + Tn+t,.C: + ......

+T..+t....C:.
As can be seen, the elements T;j (i=] .. ·... n +], j =] ...... m) identify the proportionsof expenditure on j consumption category
which are supplied by commodity i. 3 ) As
expenditure must be supplied either bydomestic commodities or imports, it follows..+tthat ~ T;j is equal to one.
i-1
The matrix T can be partitioned bysource of commodity supply into domestic
and import components, T t and T., asshown below:
3) The n + 1'· commodity denotes imports.
196

C~] [

]
[cr'"
[ ~; =-~:~ J.

(5)

The effect of a unit increase in household
consumption expenditure on gross output
can be determined by substituting equation(5) into equation (2). This gives for gross
output:(6)

The elements of matrix (1 -A)-tTt represent the direct and the indirect effects
on gross output of a unit change in household consumption expenditure. A change
in total output corresponding to a unit
increase in expenditure on j consumption
category is obtained by summing the ijelements of (1-A)-tTt at the j'h. column±{(1- A) - t T t } ;j.
over all i, that is
i-1.
Similarly, the output change of agricultural output for a unit increase in expenditure on consumption category j can bemeasured by summing the j'h. column
elements of {(I -A)-tTt};j only over all
sectors relating to agriculture.
The implications of a unit increase in
consumption expenditure for employment
and imports can be similarly constructed.
Let W be an n by n matrix whose diagonal
elements Wij (for i=j) represent employment coefficients associated with a unit
production of real output of sector j. The
off-diagonal elements are zero. The diagonal elements of Ware obtained by dividing
the ratios between the sectoral wage bill
and the sectoral gross output by the average
wage level.
The vector of labour employment by

B. NUATHAWORN: Macro-implications of Income Redistribution in Thailand

sector, L, is given by:(7)

Again, the change in gross employment
corresponding to a unit increase in expenditure on consumption category j is obtained by summing the ij elements of thematrix WeI -A)-ITI at the j'Ta column over
all i, Le., t{W(I-A)-ITI};j.
1=1

For imports, the total implication of aunit increase in consumption expenditureconsists of (1) the direct import leakage
through direct consumption of imported
commodities, and (2) the indirect increase
through intermediate purchases of imports
for production. The change in imports isgiven by equation (8), i. e. :M j is a scalar representing total import

implications associated with a unit increasein expenditure on consumption category j.
The first term on the right hand siderefers to the indirect effect on imports.
T Zi refers to the direct import componentof elf. Note that N is an n by n matrix ofimport coefficients whose diagonal elements
N ij (for i=j) refer to the amount of importrequired for a unit production of commodity
j. The off-diagonal elements are zero byconstruction.
Equations (6), (7), and (8) provide thebasic contexts on which the implicationsof a general increase in consumption
expenditure for gross output, employment,
and imports are calculated.
To assess the implications of income
redistribution, recall that CH is the vectorof household consumption by type of

expenditure. The share of j consumption
category in total consumption is given by:
(9)

or
(10)

is total household consumption
expenditure (TC=Clf) and aj is the
TC

t

j==l

.

average expenditure share. It follows that~ a j is equal to one.
j-l

When households are disaggregated byincome into poor and rich households andgiven that the consumption patterns of therich and the poor are different, the valuesof a j associated with the consumption
bundles of the rich and the poor will
differ. By substituting equation UO) into
equations (6), (7), and (8), it is possible
to assess separately the implications forchanges in gross output, employment. andimports for a unit change in the consumption of the rich and the poor. The
manipulation of a j in equation (10) forms
the basic context in which the simulationsof income redistribution are implemented
in this paper.
111.2

Consumption

PatternsbyIncomeClass
The data on consumption expenditure
by income class for Thailand are shown in
Table 1. The data refer to average budget
shares out of total expenditure. These
data are obtained from the 1971-1973
Socio-Economic Survey.·) The data on
urban consumption refer exclusively to4) See Thailand [Socio-Economic Survey, 19711973].

191

Table 1 Average Budget Shares by Income Class*

Expenditure Category
FoodHousehold Operation
Clothing
Transport
Recreation
MedicalTobaccoOthersBelow
3,000
Urban I Rural

Between
9,000-12,000
Urban I Rural

Between
18,000-24,000
Urban I RuralAbove
60,000Urban I Rural

0.707
0.197
0.004
0.019
0.000
0.022
0.025
0.026

0.519
0.150
0.076
0.056
0.027
0.050
0.061
0.061

0.501
0.147
0.060
0.049
0.025
0.058
0.062
0.098

0.361
0.159
0.085
0.126
0.030
0.052
0.003
0.184

0.489
0.182
0.009
0.036
0.009
0.070
0.054
0.151

0.444
0.178
0.124
0.040
0.010
0.076
0.048
0.080

0.359
0.148
0.125
0.086
0.012
0.102
0.058
0.110

0.220
0.207
0.047
0.262
0.034
0.042
0.036
0.152

Source: Thailand [Socio-Economic Survey, 1971-1973J.
* Note: Income brackets are in constant 1972 Baht.

the Bangkok-Thonburi area, which is thelargest urban settlement in the country.
Consumption expenditure is disaggregatedinto eight categories of expenditure, thelisting of which is shown in Table 1.
Several authors of demand analysis havesuggested methods by which the classification of commodities into basic and luxury
goods can be made on the basis of income
and price elasticities. Any classification,
however, can not escape some arbitrariness.
In this paper we simplify the matter byclassifying food, clothing and household
operation, as basic expenditure. The remainder are defined collectively as luxury
expenditure. Under this classification, as
one moves up the income scale, the proportion of income devoted to basic expenditure
declines while that of luxury expenditure
increases.
Differences in the consumption patternsof rich and poor households in Thailand
are revealed by the data in Table 1. In thisstudy, urban rich households are definedas those with annual income greater than
198

Baht 60, 000 and urban poor households
are those with annual income below Baht
3, 000. It can be seen that expenditureon basic goods accoun ts forms some 90. 8
percent of total expenditure by the poor
urban households, whereas for the richurban households it accounts for only 60. 5
percent. A shift of income of Baht 100
from the rich urban household to the poor
urban household would initially result in a
net increase in the expenditure on basic
goods by Baht 30. 3. In the case of rural
households, expenditure on basic goods bypoor households-defined to be householdswith annual income less than Baht 3,000accounts for 68. a percent of their total
expenditure. The percentage for the rich,i. e., rural households with annual income
exceeding Baht 60, 000 is 47.4 percent.
An initial shift of income of Baht 100 fromthe rich to the poor would result in a netincrease in consumption of basic goods by
Baht 20. 6 with a net reduction in the
consumption of luxury goods by the sameamount.

B. NUATHAWORN: Macro-implications of Income Redistribution in Thailand

111.3

The Multiplier Effects of Income
Redistribution
Table 2 displays the estimate of the multiplier values associated with gross output,
employment, and imports for a unit
increase in consumption for each of theconsumption categories classified above.
The multipliers are calculated from equations (6) to (8) using the data from the1975 input-output table published by the
NESDB.5) The commodity conversion matrix is derived from the input-output data
and the national income accounts data.
The data on employment coefficients are
obtained from the 1975 Labour Force
Survey.6)
The data In Table 2 show that themultipliers on output and employment forbasic expenditure, on average, are higher

increase in the consumption of food, clothing, household operation, and recreation.
As would be expected, increase in agricultural output per unit increase in consumption is greatest in the case of food,
followed by tobacco and recreation. Excluding food, the multipliers on imports
for basic expenditure are comparable tothose of the luxury expenditure. This is asurprising, but highly interesting finding.
The result is indicative of the fact that the
production structure in the Thai economy
is import-oriented. The lowest multiplieron imports is for food whereas the highest
is for medical and personal health care.
As for labour employment, the multiplieris greatest in the case of food, followed byrecreation, and household operation.
The effects of a unit increase in con-than that for the luxury expenditure. Thatis, the highest multiplier, both in terms ofgross output and employment, is for a unit

sumption expenditure by rich and poor
households are shown in terms of their

Table 2 The Mutliplier Effects of a Unit
Increase in Consumption by Commodity

T otaI I EmployTotal
Expen d·Iture I Gross IAgricuI-1
tural
Category Output Output Imports ment
Food
HouseholdOperation
Clothing
Transport
Recreation
MedicalTobaccoMiscellaneous

1. 88

1.23

0.16

210.09

1. 56

0.37

0.34

128.80

1. 63
1. 32
1. 65
1.13
1. 47

0.11
0.04
0.17
0.08
0.21

0.43
0.42
0.20
0.66
0.28

51. 9324.16
134.95
24.12
51. 68

1. 49

0.14

0.19

110.71

I
I

Source: See text.

multipliers in Table 3. The multipliers
are computed on the basis of the values of
average budget shares observed in Table l.
To afford a comparison between urban and
Table 3 The Multiplier Effects of a Unit
Increase in Consumption Expenditure

Poor Households Rich Households
Effects on
Urban I Rural
Gross
OutputGross
Agricultural
Output
Total
Imports
Employment

Urban I Rural

1. 77

1. 68

1. 62

1. 54

0.69

0.71

0.55

0.40

0.22

0.27

0.28

0.31

179.22 144.67

129.43105.775) See Thailand [1978].
6) See Thailand [Labour Force Survey, 1975J.

Source: See text.
199

rural effects. the calculations were madeseparately for urban and rural households. 7 )The data on Table 3 can be read as
follows: a unit increase in the expenditure
on consumption by the urban rich (column
3) would result in a 1. 62 unit increase ingross output. a O. 55 unit increase in agricultural output, and a 0.28 unit increase inimport requirements. As for employment,
the data indicate that a one million Baht
increase in consumption expenditure by
the urban rich would lead to an increasein labour demand by approximately 129
units (persons).
Another highly interesting result which
emerges from the data in Table 3 is thatimport intensity in the consumption patternof the poor households in the rural areas
does not differ significantly from those of
the rich households. A possible explanation
for this is that the reported data on consumption expenditure by rural households
are net of the imputed expenditure on
personal consumption. The expenditure
data by rural households refer primarily tononfood expenditure, the components ofwhich most of the expenditure on imports
is observed. Consequently, the importintensity per unit of the reported consumption expenditure appears to be only
marginally smaller than those of the richhouseholds.
Combining the output and employment
7) The urban poor refer to urban householdswith annual incomes less than Baht 3, 000
and the urban rich refer to households withannual incomes greater than Baht 60. 000.
The rural poor refer to households with annual incomes less than Baht 3,000 and therural rich refer to households with annual
incomes greater than Baht 60.000.
200

effects. it is clear within the context ofour static model that a unit increase in
consumption expenditure by the poor would
have a significantly greater impact on total
output. agricultural output, and employment
than a unit increase in consumption exThe importpenditure by the rich.
multipliers associated with the poor's consumption pattern are lower, although only
marginally. The greatest overall impact isfound on the consumption pattern of theurban poor which exhibits the highest
multipliers on output and employment, andthe lowest multiplier on imports. The
results therefore indicate a strong possibilityof both output and employment expansion,and import reduction, accompanying a shift
in consumption patterns from the rich tothe poor.
Notwithstanding the preliminary character of our results, the effects of income
redistribution can be analysed by simulating hypothetical income transfers between
households. Consider, for example. theeffect of an income transfer from the urbanrich to the urban poor. From Table 3. ashift of income from the urban rich to theurban poor would lead to a net increasein gross output by O. 15 per unit of income
shifted. In terms of percentage change,
this implies income distribution elasticity
with respect to a gross total output of
about 0.051 using the base expenditureand income data of 1975. i. e.• a one percent
income redistribution from the urban richto the urban poor would increase gross
output initially by O. 051 percent. B) On this8) Figures for gross output and income for 1975
are, respectively, million of Baht 1,083,838

B. NUATHAWORN : Macro·implications of Income Redistribution in Thailand

basis, a redistribution of 10 percentof the national income from theurban rich to the urban poor would
result in a net increase in output
of about O. 51 percent. Similar calculations can also be made to assess
the implications of income redistribution for imports, employment,
and agricultural output. On thebasis of the data in Table 3, thecomputation reveals that a 10 percent redistribution of national income from the urban rich to theurban poor would lead to a 6. 7
percent increase in agricultural
output, a 4. 5 percent increase inemployment, and a 1. 2 percent
decrease in import requirements.
Using this methodology, it is possible to assess the effects of any
income transfer between any income
groups by estimating the implied
income redistribution elasticities.
These calculations were made andthe results are shown in Table 4.
For each of the effects of income
redistribution on outputs, importrequirements, andemployment,
there is a matrix showing the impactof 16 possible results of a 10 percent
and 368, 505. Let Jy be the extent
of income shifted and Jx be thechange in gross output. It follows
from Table 3 that, for a transferfrom the urban rich to the urban
poor.
Jx=0.15L1yortJ: / '; =0.15 ( ~ )368,505 ]=0.15 [ 1, 083, 838 =0.051.

Table 4 Preliminary Estimates of the Effects ofIncome Redistribution
A: A simulation matrix of the effect of a 10 percent of
national income redistribution upon total output (per.
centages)
Rural Urban Rural
To Urban
Rich
Rich
Poor
Poor
From
Urban Poor
0.00 -0.31 -0.51 -0.77
Rural Poor
0.31
0.00 -0.20 -0.46
Urban Rich
0.00 -0.26
0.51
0.20
Rural Rich
0.00
0.77
0.26
0.46

B: A simulation matrix of the effect of a 10 percent of
national income redistribution upon agricultural output(percentages)
Rural Urban Rural
To Urban
Rich
Rich
Poor
Poor
From
Urban Poor
0.00 -4.11 -6.73 -9.27
Rural Poor
4.11
0.00 -2.62 -5.16
Urban Rich
0.00 -2.54
6.73
2.62
Rural Rich
0.00
9.27
2.54
5.16
C: A simulation matrix of the effect of a 10 percent of
national income redistribution upon import requirement (percentages)
Rural Urban Rural
To Urban
Poor
PoorRich Rich
From
Urban Poor
0.00
0.28
0.30
0.46
Rural Poor
-0.28
0.18
0.00
0.02
Urban Rich
-0.30 -0.02
0.00
0.28
Rural Rich
-0.46 -0.18 -0.28
0.00
D: A simulation matrix of the effect of a 10 percent of
national income redistribution upon labour employment (percentages)
Rural Urban Rural
To Urban
Rich
Rich
Poor
Poor
From
Urban Poor
0.00 -2.81 -7.73 -5.96
Rural Poor
2.81
0.00 -2.36 -3.16
Urban Rich
0.00 -1.92
7.73
2.36
Rural Rich
0.00
5.96
1.92
3.16

201

income transfer between the four income
groups. When income is transferred fromthe rich to the poor, the positive effects
of income redistribution are shown by theelements of the matrices below the diagonals.
The elements above the diagonals have
opposite signs, and except for this change
in signs, the matrices are symmetrical.
Because redistribution within the same
income group has no effect, the diagonal
elements of the matrices are zero.
A number of interesting results emerge
from the data in Table 4. Broadly, theresults show that income redistribution
from the rich to the poor in likely to leadto expansion in gross output. The greatest
effect is for a redistribution from the ruralrich to the urban poor. Redistribution ofincome from the rural poor to the urban
poor is expected also to increase gross
output, although the extent of the increaseis very small. The greatest stimuli for the
expansion in agricultural output is associated with a redistribution of income fromthe rural rich to the urban poor.
As for imports, the scope for import
redistribution through income redistribution seems limited.. At best, about a O. 46
percent reduction in imports can be expected with a 10 percent income redistribution from rich rural households to theurban poor. The greatest scope of income
redistribution is found in the areas of
employment. The range of increase inemployment is between 1. 9 to 7. 7 percent
for a 10 percent redistribution of income.
The highest income redistribution elasticity
for employment is for a redistribution fromthe urban rich to the urban poor. The
202

lowest impact is for a redistribution ofincome among the rich households, i. e.,from the rural rich to the urban rich.

IV Concluding Remarks
The purpose of this paper has been to
apply the present macroeconomic data toinvestigate, at an empirical level, a firstround effect of income redistribution in
Thailand. The analysis made use of a simple input-output framework. Preliminary
verification of the results indicates that the
major conditions required for the positiveeffects of income redistribution to operate
seem to be present in Thailand. The
consumption bundles of the rich and thepoor are different, and the import andemployment intensities in their consumption patterns are also different.
Assuming that aggregate demand is abottleneck to growth, the results from ourhypothetical income transfers suggest that,by manipulating income distribution infavour of the poor, there is a scope for an
expansion of output and employment, anda reduction in import requirements. For
output, the greatest effect is obtained whenincome is transferred from the rural richto the urban poor.
The results show that income transferfrom the rich to the poor can have desirable effects on agricultural output. For
example, a shift of income from the ruralrich to the urban poor would result in a
9. 27 percent increase in agricultural output
if 10 percent of national income wasredistributed, assuming unitary expenditureelasticities with respect to income. Also a

B. NUATHAWORN: Macro-implications of Income Redistribution in Thailand

4. 11 percent increase in agricultural output
would be achieved if income was shiftedfrom the rural poor. This result follows
from the fact that, on average, the urban
poor spend significantly more on food as aproportion of their income than their rural

the results from this study are taken as abasis for the development of a growth-cumdistribution model that can provide aframework for a detailed analysis of theseissues.

counterparts. As a result, a shift of income

Referencesfrom the rural poor to the urban poor would
result in a net increase in the demand for
agricultural output.
If it can be assumed that the rural poor
derive their incomes mainly from agriculture, then our results strongly support theargument for using income redistribution
as a policy basis for increasing agricultural
incomes, via the effect of demand recomposition. On the other hand, were there to
be a further decline in the income level ofthe poor, this could be detrimental to theagricultural sector because of a fall in the
demand for foods and other agriculturerelated products.
To formulate an income redistribution
policy based on the empirical knowledge so
far obtained is not, however, recommended.
This is because the feedback effects andother properties of income distribution, in
addition to those considered up to thispoint, need extensive consideration. The
first is the secondary implications of income
redistribution for other categories of final
demand such as investment and exports.
The second is the effect of income redistribution on price-cost ratios. An investigation of these issues is possible with thehelp of a disaggregated macroeconomic
model. As noted at the outset of this paper,

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