Income Distribution, Household Debt and Growth in Modern Financialized Economies. Issue 2 (2nd April 2020)

• Record Type: Journal Article
• Authors: Costantini, Orsola; Seccareccia, Mario
• Is Part Of: Journal of economic issues. Volume 54:Issue 2(2020)
• Page Start: 444
• Page End: 453
• Publication Date: 2020-04-02
• Subjects: financialization -- sectoral balances -- household debt accumulation -- disaggregated saving rates by income groups; E2 -- E3; Economics -- Periodicals; Economics; Économie politique -- Périodiques; Economie; ECONOMICS; ECONOMIC POLICY; Periodicals; 330.05
• DOI: 10.1080/00213624.2020.1752537
• Languages: English
• ISSNs: 0021-3624

Abstract

Abstract: We analyze some core features of the institutional transformation of the Canadian and U.S. economies over the last half century, as they became increasingly financialized economies resting on household consumption as the key contributor to economic growth, despite weak growth in real wages and personal disposable income. This growth in consumption spending is highly fragile not only because it is a debt-led growth that has relied on an unsustainable expansion of household indebtedness largely dependent on credit bubbles in the housing market, but also because of the perverse form of this indebtedness. Studied from the angle of disaggregated household consumption/saving behavior, it is the poorest and most vulnerable households who have been building up unsustainable debt, thereby presaging increasing financial fragility and crises.