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

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
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

Keywords

Economics and econometrics

Access to Document

10.1093/cje/bev070

https://doi.org/10.1093/cje/bev070

Cite this

@article{0bc4edfdb73c4dfa9d7d0ec8703e2df9,

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

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.",

keywords = "Economics and econometrics",

author = "Engelbert Stockhammer and Rafael Wildauer",

year = "2016",

month = nov,

day = "1",

doi = "10.1093/cje/bev070",

language = "English",

volume = "40",

pages = "1609--1634",

journal = "Cambridge Journal of Economics",

issn = "0309-166X",

publisher = "Oxford University Press",

number = "6",

}

TY - JOUR

T1 - Debt-driven growth? Wealth, distribution and demand in OECD countries.

AU - Stockhammer, Engelbert

AU - Wildauer, Rafael

PY - 2016/11/1

Y1 - 2016/11/1

N2 - 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.

AB - 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.

KW - Economics and econometrics

UR - https://academic.oup.com/cje/article/40/6/1609/2875449

U2 - 10.1093/cje/bev070

DO - 10.1093/cje/bev070

M3 - Article

SN - 0309-166X

VL - 40

SP - 1609

EP - 1634

JO - Cambridge Journal of Economics

JF - Cambridge Journal of Economics

IS - 6

ER -

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

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this