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

Stockhammer, Engelbert and Wildauer, Rafael (2016) Debt-driven growth? Wealth, distribution and demand in OECD countries. Cambridge Journal of Economics, 40(6), pp. 1609-1634. ISSN (print) 0309-166X

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The paper investigates the effects of changes in the distribution of income and wealth on aggregate demand and its components. The model of Bhaduri and Marglin is extended 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 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 main drivers of aggregate demand in the decade prior to the 2007 crisis.

Item Type: Article
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)
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Depositing User: Engelbert Stockhammer
Date Deposited: 04 Apr 2018 08:54
Last Modified: 04 Apr 2018 08:54

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