Income distribution and the current account

Behringer, Jan; Treeck, Till van

doi:10.1016/j.jinteco.2018.06.006

Cited by 58 publications

(72 citation statements)

References 42 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…In contrast we fail to find evidence for a positive link between an increasingly polarized distribution of income and household indebtedness as reported by several authors (Behringer & Treeck 2013;Gu & Huang 2014;Kumhof et al 2012;Klein 2015;Malinen 2014;Perugini et al 2016). We think our paper is different in three key aspects which explain the differences in the results.…”

Section: Resultscontrasting

confidence: 86%

“…The Financial Crisis triggered by the collapse of the US mortgage market has motivated a wave of empirical studies which look at the relationship between the trend of rising income inequality and household indebtedness (Klein 2015;Perugini et al 2016;Gu & Huang 2014;Malinen 2014;Behringer & Treeck 2013;Bordo & Meissner 2012;Kumhof et al 2012). Most of these studies are motivated by the theoretical work of Rajan (2010) and Kumhof and Rancière (2010) and do not estimate theory-derived structural models but rely on ad hoc specifications instead.…”

Section: The Empirical Literaturementioning

confidence: 99%

“…We aim to address this problem in this paper by going beyond bivariate models. Behringer and van Treeck (2013) and Kumhof et al (2012) do not investigate the determinants of private sector or household debt but focus on the current account balance in % of GDP instead. They argue that if households engage in debt-financed expenditure cascades due to upward-looking status comparison, then household net-lending will decrease and given the corporate and public sector balance the current account will deteriorate.…”

Section: The Empirical Literaturementioning

confidence: 99%

“…Kumhof et al (2012) have proposed a two-class DSGE model where poor households are pushed into debt as they are trying to maintain their consumption levels. Several authors (Frank et al 2014;Kapeller & Schütz 2014;Ryoo & Kim 2014;Behringer & Treeck 2013) have argued that rapidly growing top incomes lead to rising household debt if consumers follow social norms and imitate the lifestyle and expenses of richer peers. This latter argument is based on a behavioural economics approach, in particular otherregarding social norms for which there exists empirical support especially in the context of consumption and saving (Alvarez-Cuadrado & Japaridze 2017; Kim et al 2015;Drechsel-Grau & Schmid 2014).…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Expenditure Cascades, Low Interest Rates or Property Booms? Determinants of Household Debt in OECD Countries

Stockhammer¹,

Wildauer

2018

RBE

View full text Add to dashboard Cite

The past decades have witnessed a strong increase in household debt and high growth of private consumption expenditures in many countries. This paper empirically investigates four explanations: First, the expenditure cascades hypothesis argues that an increase in inequality induced lower income groups to copy the spending behaviour of richer peer groups and thereby drove them into debt ('keeping up with the Joneses'). Second, the housing boom hypothesis argues that increasing property prices encourage household spending and household borrowing due to wealth effects, eased credit constraints and the prospect of future capital gains. Third, the low interest hypothesis argues that low interest rates encouraged households to take on more debt. Fourth, the financial deregulation hypothesis argues that deregulation of the financial sector boosted credit supply. The paper tests these hypotheses by estimating the determinants of household borrowing using a panel of 11 OECD countries (198011 OECD countries ( -2011. Results indicate that real estate prices and low interest rates were the most important drivers of household debt. In contrast the data does not support the expenditure cascades hypothesis as a general explanation of debt accumulation across OECD countries. Our results are consistent with the financial deregulation hypothesis, but its explanatory power for the 1995-2007 period is low.

show abstract

Section: Resultscontrasting

confidence: 86%

Section: The Empirical Literaturementioning

confidence: 99%

Section: The Empirical Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Expenditure Cascades, Low Interest Rates or Property Booms? Determinants of Household Debt in OECD Countries

Stockhammer¹,

Wildauer

2018

RBE

View full text Add to dashboard Cite

show abstract

“…Darku (2014) for Canada, however, finds negative effects of rising inequality on saving rates of private households, in line with the relative income hypothesis. Behringer/van Treeck (2015) for a panel of 20 countries find that, cet. par., rising personal income inequality leads to a deterioration of the financial balances of the private household sector, which is interpreted as supporting the relative income hypothesis.…”

mentioning

confidence: 99%

Post-Keynesian macroeconomics since the mid 1990s: main developments

Hein

2017

European Journal of Economics and Economic Policies: Intervention

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn this paper the main developments in post-Keynesian macroeconomics since the mid1990s will be reviewed. For this purpose the main differences between heterodox economics in general, including post-Keynesian economics, and orthodox economics will be reiterated and an overview over the strands of post-Keynesian economics, their commonalities and developments since the 1930s will be outlined. This will provide the grounds for touching upon three important areas of development and progress of postKeynesian macroeconomics since the mid-1990s: first, the integration of distribution issues and distributional conflict into short-and long-run macroeconomics, both in theoretical and in empirical/applied works; second, the integrated analysis of money, finance and macroeconomics and its application to changing institutional and historical circumstances, like the process of financialisation; and third, the development of full-blown macroeconomic models, providing alternatives to the mainstream 'New Consensus Model' (NCM), and allowing to derive a full macroeconomic policy mix as a more convincing alternative to the one implied and proposed by the mainstream NCM, which has desperately failed in the face of the recent crises.

show abstract

Has the current account broken up with its fundamentals in Central and Eastern Europe?

Coleman

Cuestas

2021

Int. J Fin Econ

View full text Add to dashboard Cite

Substantial capital outflows across Europe following the 2007/8 Global Financial Crisis and 2010 European Sovereign Debt crisis raise concerns regarding potential capital outflows from the economies of Central and Eastern European countries. To shed light on country‐level factors that can mitigate crisis and potential capital outflows across these countries, this article investigates which factors have influenced the evolution of their current accounts. Our analyses, using dynamic ordinary least squares, suggest that the long‐run determinants of the current account have indeed changed over time, and threshold cointegrated estimates also confirm that, for each country, the parameters are dependent on thresholds for certain variables and there is significant heterogeneity across the countries. Our overall results are robust to complementary analyses, such as threshold estimation approach. We comment on some possible implications of these differences.

show abstract

Income distribution and the current account

Cited by 58 publications

References 42 publications

Expenditure Cascades, Low Interest Rates or Property Booms? Determinants of Household Debt in OECD Countries

Expenditure Cascades, Low Interest Rates or Property Booms? Determinants of Household Debt in OECD Countries

Post-Keynesian macroeconomics since the mid 1990s: main developments

Has the current account broken up with its fundamentals in Central and Eastern Europe?

Contact Info

Product

Resources

About