Debt-driven growth? Wealth, distribution and demand in OECD countries

Stockhammer, Engelbert and Wildauer, Rafael (2015) Debt-driven growth? Wealth, distribution and demand in OECD countries. (Discussion Paper) Kingston upon Thames, U.K. : Faculty of Arts and Social Sciences, Kingston University. 35 p. (Economics Discussion Paper, no. 2015-02)

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The paper investigates the effects of changes in the distribution of income and in wealth on aggregate demand and its components. We extend the Bhaduri and Marglin (1990) model to include personal income inequality as well as asset prices and debt. This allows for an evaluation of the wage or profit-led nature of demand regimes, of the expenditure cascade argument (Frank et al. 2010) and several hypotheses regarding the effects of wealth and debt. Our estimates are based on a panel of 18 OECD countries covering the period 1980-2013. For the full panel the average demand regime is found to be wage led. We fail to find effects of personal inequality, but do find strong effects of debt and property prices which have been the major drivers of aggregate demand in the decade prior to the 2007 crisis.

Item Type: Monograph (Discussion Paper)
Uncontrolled Keywords: post-Keynesian economics; wage-led growth; Bhaduri-Marglin model; demand regimes; wealth effect; Veb
Research Area: Economics and econometrics
Faculty, School or Research Centre: Faculty of Arts and Social Sciences (until 2017) > School of Economics, History and Politics (from November 2012)
Depositing User: Andrea Ingianni
Date Deposited: 18 Feb 2015 12:40
Last Modified: 26 Feb 2015 11:36
DOI: 2015-2

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