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Emulation and Consumer Debt: Implications of Keeping-Up with the Joneses

Author

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  • Yun Kim

    (Department of Economics, Trinity College)

Abstract

We develop a stock-flow consistent neo-Kaleckian macro model which incorporates consumption emulation and consumer debt accumulation. Income distributional dimension is also incorporated via the conflict-claims approach of inflation. Using this model, we investigate the macroeconomic effects of lower income group's consumption emulation of higher income group through borrowing. We find that emulation could expand aggregate demand and hence generate a faster economic growth. Our results also indicate that consumption emulation could be a source of widening income inequality.

Suggested Citation

  • Yun Kim, 2012. "Emulation and Consumer Debt: Implications of Keeping-Up with the Joneses," Working Papers 1208, Trinity College, Department of Economics.
    • Handle: RePEc:tri:wpaper:1208
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    File URL: http://www3.trincoll.edu/repec/WorkingPapers2012/WP12-08.pdf
    File Function: First version, 2012
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    References listed on IDEAS

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    12. Blecker, Robert A, 1989. "International Competition, Income Distribution and Economic Growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(3), pages 395-412, September.
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    Citations

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    Cited by:

    1. Mark Setterfield & Yun K. Kim & Jeremy Rees, 2016. "Inequality, Debt Servicing and the Sustainability of Steady State Growth," Review of Political Economy, Taylor & Francis Journals, vol. 28(1), pages 45-63, January.
    2. Mark Setterfield & Yun K. Kim, 2016. "Household Borrowing and the Possibility of ``Consumption-Driven, Profit-Led Growth’’," Working Papers 2016_01, University of Massachusetts Boston, Economics Department.
    3. Pintu Parui, 2023. "Worker household debt, functional income distribution and growth: A neo‐Kaleckian perspective," Metroeconomica, Wiley Blackwell, vol. 74(2), pages 446-476, May.
    4. Setterfield, Mark & Kim, Yun K., 2016. "Debt servicing, aggregate consumption, and growth," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 22-33.
    5. Mark Setterfield & Yun K. Kim, 2017. "Household borrowing and the possibility of 'consumption-driven, profit-led growth'," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(1), pages 43-60, January.
    6. Parui, Pintu, 2021. "Financialization and endogenous technological change: A post-Kaleckian perspective," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 221-244.
    7. Mark Setterfield, 2014. "Rising Income Inequality, Increased Household Indebtedness, and Post Keynesian Macrodynamics," Working Papers 1403, New School for Social Research, Department of Economics.
    8. Brochier, Lidia & Macedo e Silva, Antonio Carlos, 2017. "The Macroeconomic Implications of Consumption: State-of-Art and Prospects for the Heterodox Future Research," MPRA Paper 92672, University Library of Munich, Germany.
    9. Parui, Pintu, 2020. "Corporate Debt, Rentiers' Portfolio Dynamics, Instability and Growth: A neo-Kaleckian Perspective," MPRA Paper 102870, University Library of Munich, Germany.
    10. Brochier, Lidia & Freitas, Fábio, 2019. "Stock-flow ratios and the paradox of debt in canonical neo-kaleckian and supermultiplier models," MPRA Paper 96252, University Library of Munich, Germany.

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    More about this item

    Keywords

    consumer debt; emulation; income distribution; growth;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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