IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_5423.html
   My bibliography  Save this paper

Social Capital and Crises with an Application to Iceland

Author

Listed:
  • Thorvaldur Gylfason

Abstract

Economic growth is propelled in part by the accumulation of different kinds of capital, including social capital in its several guises. This paper considers the interplay between financial crises and various aspects of social capital which, if it is allowed to depreciate, can undermine economic prosperity and growth and possibly also contribute to crises. Specifically, the paper offers some empirical comparisons between the experience of the United States in the 1920s and in the 1990s until 2008 with the experience of Sweden and Iceland. The working hypothesis is that social capital decay can be a precursor as well as consequence of slow economic growth and of financial crises. Iceland is a case in point. An increasingly unfair distribution of income and wealth is likely to exacerbate the problem.

Suggested Citation

  • Thorvaldur Gylfason, 2015. "Social Capital and Crises with an Application to Iceland," CESifo Working Paper Series 5423, CESifo.
    • Handle: RePEc:ces:ceswps:_5423
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp5423.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. George A. Akerlof & Paul M. Romer, 1993. "Looting: The Economic Underworld of Bankruptcy for Profit," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 1-74.
    2. Robert H. Wade & Silla Sigurgeirsdottir, 2012. "Iceland's rise, fall, stabilisation and beyond," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 36(1), pages 127-144.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    5. Lars Jonoug & Jaakko Kiander & Pentti Vartia (ed.), 2009. "The Great Financial Crisis in Finland and Sweden," Books, Edward Elgar Publishing, number 13404.
    6. Galbraith, James K., 2012. "Inequality and Instability: A Study of the World Economy Just Before the Great Crisis," OUP Catalogue, Oxford University Press, number 9780199855650.
    7. repec:bla:econom:v:51:y:1984:i:202:p:129-39 is not listed on IDEAS
    8. Robert J. Shiller, 2015. "Irrational Exuberance," Economics Books, Princeton University Press, edition 3, number 10421.
    9. Andrew G. Berg & Jonathan D. Ostry, 2017. "Inequality and Unsustainable Growth: Two Sides of the Same Coin?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(4), pages 792-815, November.
    10. Gudrun Johnsen, 2014. "Bringing Down the Banking System," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-34735-0, October.
    11. Anat Admati & Martin Hellwig, 2013. "The Bankers' New Clothes: What's Wrong with Banking and What to Do about It," Economics Books, Princeton University Press, edition 1, volume 1, number 9929.
    12. Mr. Jonathan David Ostry & Mr. Andrew Berg & Mr. Charalambos G Tsangarides, 2014. "Redistribution, Inequality, and Growth," IMF Staff Discussion Notes 2014/002, International Monetary Fund.
    13. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    14. Jonathan David Ostry & Andrew Berg & Charalambos G Tsangarides, 2014. "Redistribution, Inequality, and Growth," IMF Staff Discussion Notes 14/02, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sebastiano Fadda, 2015. "What to do about income inequality," Argomenti, University of Urbino Carlo Bo, Department of Economics, Society & Politics, vol. 1(1), pages 1-19, May-Augus.
    2. Sudip Ranjan Basu, 2017. "Do data show divergence? Revisiting global income inequality trends," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 24(1), pages 23-53, June.
    3. Marcus Miller & Lei Zhang, 2013. "The Invisible Hand And The Banking Trade: Seigniorage, Risk-Shifting, And More," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 56(3-4), pages 365-388.
    4. Nicholas Apergis & Christina Christou & Rangan Gupta & Stephen M. Miller, 2015. "Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across the U.S. States," Working Papers 201539, University of Pretoria, Department of Economics.
    5. Chih-Mei Luo, 2020. "Answering economic inequality other than with populism and protectionism: the Danish formula of inclusive capitalism," Asia Europe Journal, Springer, vol. 18(1), pages 139-155, March.
    6. Aiyar, Shekhar & Ebeke, Christian, 2020. "Inequality of opportunity, inequality of income and economic growth," World Development, Elsevier, vol. 136(C).
    7. Pierre Kohler & Francis Cripps, 2018. "Do Trade and Investment (Agreements) Foster Development or Inequality?," GDAE Working Papers 18-03, GDAE, Tufts University.
    8. Barth, James R. & Miller, Stephen Matteo, 2018. "Benefits and costs of a higher bank “leverage ratio”," Journal of Financial Stability, Elsevier, vol. 38(C), pages 37-52.
    9. Michael D. Bordo, 2017. "An Historical Perspective on the Quest for Financial Stability and the Monetary Policy Regime," Economics Working Papers 17108, Hoover Institution, Stanford University.
    10. Gylfi Zoega, 2019. "Greece and the Western Financial Crisis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(2), pages 113-126, June.
    11. Thorvaldur Gylfason, 2014. "Iceland: How Could This Happen?," CESifo Working Paper Series 4605, CESifo.
    12. Voinea, L. & Lovin, H. & Cojocaru, A., 2018. "The impact of inequality on the transmission of monetary policy," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 236-250.
    13. Thorvaldur Gylfason & Gylfi Zoega, 2017. "The Dutch Disease in Reverse: Iceland's Natural Experiment," CESifo Working Paper Series 6513, CESifo.
    14. Serhan Cevik & Carolina Correa‐Caro, 2020. "Taking down the wall: Transition and inequality," Review of Development Economics, Wiley Blackwell, vol. 24(1), pages 238-253, February.
    15. Thorvaldur Gylfason, 2018. "Ten Years After: Iceland's Unfinished Business," CESifo Working Paper Series 7318, CESifo.
    16. Andrew Berg & Jonathan D. Ostry & Charalambos G. Tsangarides & Yorbol Yakhshilikov, 2018. "Redistribution, inequality, and growth: new evidence," Journal of Economic Growth, Springer, vol. 23(3), pages 259-305, September.
    17. Nauro F. Campos & Paul De Grauwe & Yuemei Ji, 2017. "Structural Reforms, Growth and Inequality: An Overview of Theory, Measurement and Evidence," CESifo Working Paper Series 6812, CESifo.
    18. Bordo, M.D. & Meissner, C.M., 2016. "Fiscal and Financial Crises," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 355-412, Elsevier.
    19. John C. Anyanwu, 2016. "Empirical Analysis of the Main Drivers of Income Inequality in Southern Africa," Annals of Economics and Finance, Society for AEF, vol. 17(2), pages 337-364, November.
    20. Farm, Ante, 2017. "Basic Monetary Economics," Working Paper Series 8/2017, Stockholm University, Swedish Institute for Social Research.

    More about this item

    Keywords

    social capital; inequality; corruption; trust; financial crises;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G01 - Financial Economics - - General - - - Financial Crises

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_5423. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.