King's College London

Research portal

Growing differently? Financial cycles, austerity, and competitiveness in growth models since the Global Financial Crisis

Research output: Contribution to journalArticlepeer-review

Original languageEnglish
Pages (from-to)1
Number of pages39
JournalREVIEW OF INTERNATIONAL POLITICAL ECONOMY
DOIs
Published21 Apr 2021

Documents

King's Authors

Abstract

The paper contributes to the recent growth models debate through a cross-country analysis of growth drivers before and after the 2008 Global Financial Crisis (GFC). It argues that the widely used dichotomy of export-led versus (debt-financed) consumption-led growth has lost its usefulness since the GFC. Specifically, identifying growth models through growth contributions can give misleading results when the drivers of economic growth change. The paper contends that Comparative Political Economy (CPE) has neglected the unstable nature of financial growth drivers, effectively ignores fiscal policy, and overemphasizes price competitiveness as a growth driver. It shows empirically that, first, debt-financed growth is cyclical and financial booms come with busts and debt overhang; second, post-GFC growth dynamics are strongly shaped by the fiscal policy reaction; third, price competitiveness through wage deflation has played a negligible role in driving growth. We conclude that CPE needs to broaden its analysis of growth drivers in order to understand how the GFC transformed growth models.

Download statistics

No data available

View graph of relations

© 2020 King's College London | Strand | London WC2R 2LS | England | United Kingdom | Tel +44 (0)20 7836 5454