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Income distribution, inequality and debt

In: Income Distribution, Growth and Unemployment

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Abstract

This Chapter modifies the role of unemployment in the consumption function that was considered in Chapter 10. In fact, while in that Chapter unemployment was considered a macro indicator of inequality depressing consumption, in the present Chapter inequality, by means of a Veblen effect, stimulates debt in order to keep up with the riches. This model tries to catch the "zeitgeist" of the Great Recession, where the presence of this effect along with the existence of evolutionary forces, has transformed consumption into the driver of the system, given a permissive banking system. Analyzed within a regime-switching methodology, this model is capable not only of generating complex dynamics but to shed new light on the income distribution debate (IDD). In this case, it becomes even more clear-cut that the nature of the income distribution loop may change according to the length of period considered.

Suggested Citation

  • ., 2022. "Income distribution, inequality and debt," Chapters, in: Income Distribution, Growth and Unemployment, chapter 13, pages 184-199, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:21213_13
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    File URL: https://www.elgaronline.com/view/9781802206005.00022.xml
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    Cited by:

    1. Nicolò Bird & Ganga Tilakaratna & Louise Moreira Daniels & Shilohni Sumanthiran & Élise Chrétien & Krista Alvarenga & Pedro Arruda, 2022. "Public expenditure analysis for social protection in Sri Lanka," Research Report 74, International Policy Centre for Inclusive Growth.
    2. Hanley, Brenda J. & Carstensen, Michelle & Walsh, Daniel P. & Christensen, Sonja A. & Storm, Daniel J. & Booth, James G. & Guinness, Joseph & Them, Cara E. & Ahmed, Md Sohel & Schuler, Krysten L., 2022. "Informing Surveillance through the Characterization of Outbreak Potential of Chronic Wasting Disease in White-Tailed Deer," Ecological Modelling, Elsevier, vol. 471(C).

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