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Household debt, financialization, and macroeconomic performance in the United States, 1951-2009

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  • Yun Kim

Abstract

We empirically examine the relationship between U.S. output and household debt. To account for structural change due to financial liberalization, we divide the sample at the fourth quarter of 1982. We find structural differences between earlier and later business cycles for the U.S. household sector and its relation to the macroeconomy. In the regression analysis for pre-1982, we find no evidence that household debt variables had any negative effect on output. However, we find some evidence that household debt variables have negative effects on output for the post-1982 period. A formal structural break test shows evidence of a structural change in the relationship of U.S. output to household debt. Unit root tests for the separate samples show that none of the household variables possesses a unit root in the earlier period, yet all of them do in the late period, indicating fundamental differences between earlier and later periods in terms of the data-generating process.

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  • Yun Kim, 2013. "Household debt, financialization, and macroeconomic performance in the United States, 1951-2009," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(4), pages 675-694.
    • Handle: RePEc:mes:postke:v:35:y:2013:i:4:p:675-694
    DOI: 10.2753/PKE0160-3477350408
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    Cited by:

    1. Eckhard Hein & Walter Paternesi Meloni & Pasquale Tridico, 2021. "Welfare models and demand-led growth regimes before and after the financial and economic crisis," Review of International Political Economy, Taylor & Francis Journals, vol. 28(5), pages 1196-1223, October.
    2. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    3. Robert A. Blecker, 2016. "Wage-led versus profit-led demand regimes: the long and the short of it," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 373-390, October.
    4. Gemzik-Salwach Agata & Perz Paweł, 2018. "Financialization in the Regional Aspect. An Attempt to Measure a Phenomenon," Central European Economic Journal, Sciendo, vol. 5(52), pages 56-66, January.
    5. Konstantakis, Konstantinos & Michaelides, Panayotis G., 2014. "Combining Input-Output (IO) analysis with Global Vector Autoregressive (GVAR) modeling: Evidence for the USA (1992-2006)," MPRA Paper 67111, University Library of Munich, Germany.
    6. Engelbert Stockhammer & Giorgos Gouzoulis & Rob Calvert Jump, 2019. "Debt-driven business cycles in historical perspective: The cases of the USA (1889-2015) and UK (1882-2010)," Working Papers PKWP1907, Post Keynesian Economics Society (PKES).
    7. Engelbert Stockhammer & Giorgos Gouzoulis, 2023. "Debt-GDP cycles in historical perspective: the case of the USA (1889–2014)," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(2), pages 317-335.
    8. Stefano Di Bucchianico, 2020. "A note on financialization from a Classical-Keynesian standpoint," Department of Economics University of Siena 824, Department of Economics, University of Siena.
    9. Hein, Eckhard & Dodig, Nina, 2014. "Financialisation, distribution, growth and crises: Long-run tendencies," IPE Working Papers 35/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    10. Filippo Gusella & Engelbert Stockhammer, 2021. "Testing fundamentalist–momentum trader financial cycles: An empirical analysis via the Kalman filter," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 758-797, November.
    11. Eric Kemp‐Benedict, 2020. "Convergence of actual, warranted, and natural growth rates in a Kaleckian–Harrodian‐classical model," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 851-881, November.
    12. Jose Barrales-Ruiz & Codrina Rada & Rudiger von Arnim, 2024. "Evidence on Goodwin cycles across US golden age and neoliberal era," Working Papers 2410, New School for Social Research, Department of Economics.
    13. Filippo Gusella, 2019. "Modelling Minskyan financial cycles with fundamentalist and extrapolative price strategies: An empirical analysis via the Kalman filter approach," Working Papers - Economics wp2019_24.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    14. Rafael Wildauer, 2016. "Determinants of US household debt: New evidence from the SCF," Working Papers PKWP1608, Post Keynesian Economics Society (PKES).
    15. Stockhammer, Engelbert & Calvert Jump, Robert & Kohler, Karsten & Cavallero, Julian, 2019. "Short and medium term financial-real cycles: An empirical assessment," Journal of International Money and Finance, Elsevier, vol. 94(C), pages 81-96.
    16. Akcay, Ümit & Hein, Eckhard & Jungmann, Benjamin, 2021. "Financialisation and macroeconomic regimes in emerging capitalist economies before and after the Great Recession," IPE Working Papers 158/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    17. Eric Kemp-Benedict & Yun K. Kim, 2018. "Technological Change, Household Debt, and Distribution," Working Papers 2018-02, University of Massachusetts Boston, Economics Department.
    18. Hein, Eckhard, 2017. "Financialisation and tendencies towards stagnation: The role of macroeconomic regime changes in the course of and after the financial and economic crisis 2007-9," IPE Working Papers 90/2017, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    19. Dünhaupt, Petra & Hein, Eckhard, 2018. "Financialisation, distribution & the macroeconomic regimes before & after the crisis: A post-Keynesian view on Denmark, Estonia & Latvia," IPE Working Papers 104/2018, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    20. Roberto Veneziani & Luca Zamparelli & Leila E. Davis, 2017. "Financialization And Investment: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1332-1358, December.
    21. Suhal Kusairi & Suriyani Muhamad & M Musdholifah & Shu-Chen Chang, 2019. "Labor Market and Household Debt in Asia Pacific Countries: Dynamic Heterogeneous Panel Data Analysis," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-15, June.
    22. Konstantakis, Konstantinos N. & Michaelides, Panayotis G., 2014. "Transmission of the debt crisis: From EU15 to USA or vice versa? A GVAR approach," Journal of Economics and Business, Elsevier, vol. 76(C), pages 115-132.
    23. Hein, Eckhard, 2022. "Varieties of demand and growth regimes: Post-Keynesian foundations," IPE Working Papers 196/2022, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    24. Hein, Eckhard, 2020. "Financialisation and stagnation: A macroeconomic regime perspective," IPE Working Papers 149/2020, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    25. Hein, Eckhard, 2018. "Inequality and growth: Marxian and post-Keynesian/Kaleckian perspectives on distribution and growth regimes before and after the Great Recession," IPE Working Papers 96/2018, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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