Financialisation, income distribution and aggregate demand in the USA

Onaran, Ö., Stockhammer, E. and Grafl, L. 2011. Financialisation, income distribution and aggregate demand in the USA. Cambridge Journal of Economics. 35 (4), pp. 637-661.

TitleFinancialisation, income distribution and aggregate demand in the USA
AuthorsOnaran, Ö., Stockhammer, E. and Grafl, L.
Abstract

This paper investigates the effects of financialisation and functional income distribution on aggregate demand in the USA by estimating the effects of the increase in rentier income (dividends and interest payments) and housing and financial wealth on consumption and investment. The redistribution of income in favour of profits suppresses consumption, whereas the increase in the rentier income and wealth has positive effects. A higher rentier income decreases investment. Without the wealth effects, the overall effect of the changes in distribution on aggregate demand would have been negative. Thus a pro-capital income distribution leads to a slightly negative effect on growth, i.e. the USA economy is moderately wage-led.

JournalCambridge Journal of Economics
Journal citation35 (4), pp. 637-661
ISSN0309-166X
Year2011
PublisherOxford University Press
Digital Object Identifier (DOI)doi:10.1093/cje/beq045
Publication dates
Published2011

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