Financialisation, income distribution and aggregate demand in the USA

By Özlem Onaran, Engelbert Stockhammer, Lucas Grafl. 2011

284 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Finance, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/e53bfc4c3a86cdc084cb3d7756ca49397f2eac32

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Citations in the corpus

Testing the Bhaduri–Marglin model with OECD panel data (2014, unknown): “…the Netherlands, the UK and the US (see Bowles and Boyer 1995; Stockhammer and Onaran 2004; Naastepad 2006; Naastepad and Storm 2006-7;2 Ederer and Stockhammer 2007; Stockhammer and Ederer 2008; Hein and Vogel 2008, 2009; Onaran, Stockhammer, and Grafl 2011; Stockhammer, Hein, and Grafl 2011).”
Income Distribution and Growth: A Global Model (2014, methodology): “…income distribution on growth has focused on developed countries (eg, Bowles and Boyer, 1995; Hein and Vogel, 2008; Naastepad and Storm, 2007; Onaran et al, 2011; Stockhammer et al, 2009; 2011) with only few exceptions on developing countries (Jetin and Kurt, 2011; Molero Simarro, 2011;…”
Debt-driven growth? Wealth, distribution and demand in OECD countries (2016, methodology): “The closest to our research question are Onaran et al. (2011).”
Inequality, the Great Recession, and Slow Recovery (2014, unknown): “…theories of consumption and income distribution as discussed in other research (Brown, 2004, Boushey and Weller, 2008, Barba and Pivetti, 2009, and Onaran et al., 2011). specifically in the personal distribution of income, could encourage higher consumption propensities for at least some…”
Wage-led growth in the EU15 member-states: the effects of income distribution on growth, investment, trade balance and inflation (2016, background): “Also, Onaran et al. (2011) integrate housing and financial wealth effects on consumption and find the US to be a moderately wage-led demand regime.”
Class in the 21st century: Asset inflation and the new logic of inequality (2019, background): “Standing is not alone in foregrounding a return of the rentier class, see, for example, Dume nil and Le vy (2005), Lapavitsas (2009), Stockhammer et al. (2011).”
The effects of financialization on investment: evidence from firm-level data for the UK (2018, background): “4 income distribution and demand (Onaran et al., 2010; Hein, 2013), and in particular on investment (Stockhammer, 2004, 2006; Orhagnazi, 2008a; Dallery, 2009; Cordonnier and Van de Velde, 2015).”
Stock-Flow Consistent Modeling Through the Ages (2013, unknown): “The concept of financialization has been thoroughly investigated in the heterodox tradition, and different aspects have been at the center of the analysis of different authors (see, among others, Bhaduri 2011, Dumenil and Levy 2011, and Onaran, Stockhammer, and Grafl 2011).”