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

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

Stockhammer, Engelbert and Wildauer, Rafael ORCID: 0000-0001-6395-6286 (2015) Debt-driven growth? Wealth, distribution and demand in OECD countries. Cambridge Journal of Economics, 40 (6). pp. 1609-1634. ISSN 0309-166X (Print), 1464-3545 (Online) (doi:

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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: Article
Uncontrolled Keywords: post-Keynesian economics; wage-led growth; Bhaduri-Marglin model; demand regimes; wealth effect; Veb
Subjects: H Social Sciences > HB Economic Theory
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) > Greenwich Political Economy Research Centre (GPERC)
Last Modified: 04 Aug 2021 16:33

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