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

Engelbert Stockhammer; Rafael Wildauer

doi:10.1093/cje/bev070

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

Engelbert Stockhammer, Rafael Wildauer

Research output: Contribution to journal › Article › peer-review

107 Citations (Scopus)

Abstract

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.

Original language	English
Pages (from-to)	1609-1634
Number of pages	26
Journal	CAMBRIDGE JOURNAL OF ECONOMICS
Volume	40
Issue number	6
Early online date	27 Nov 2015
DOIs	https://doi.org/10.1093/cje/bev070
Publication status	Published - 1 Nov 2016

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http://eprints.kingston.ac.uk/40883/

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

Abstract

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