Financialization, income distribution, and aggregate demand in the USA.
Onaran, Ozlem and Stockhammer, Engelbert and Grafl, Lukas (2011) Financialization, income distribution, and aggregate demand in the USA. Cambridge Journal of Economics, 35 (4). pp. 637-651. ISSN 0309-166X
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This paper investigates the effects of financialization 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 favor 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.
Originally published as discussion paper no 136 (March 2010) by Middlesex University Business School, Department of Economics and Statistics.
|Research Areas:||A. > Business School > Economics|
|Permissions granted by publisher:||Pre-refereed version as permitted by publisher.|
|Deposited On:||20 Apr 2010 13:27|
|Last Modified:||01 May 2015 12:10|
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