1. Inequality, Debt Servicing, and the Sustainability of Steady State Growth
- Author:
- Mark Setterfield, Yun K. Kim, and Jeremy Rees
- Publication Date:
- 11-2015
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- We investigate the claim that the way in which debtor households service their debts matters for macroeconomic performance. A Kaleckian growth model is modified to incorporate working households who borrow to finance consumption that is determined, in part, by the desire to emulate the consumption patterns of more affluent households. The impact of this behavior on the sustainability of the growth process is then studied by means of a numerical analysis that captures various dimensions of income inequality. When compared to previous contributions to the literature, our results show that the way in which debtor households service their debt has both quantitative and qualitative effects on the economy’s macrodynamics.
- Topic:
- Debt, Inequality, Islamic State, Economic Theory, and Sustainability
- Political Geography:
- North America and United States of America