The American Crisis: Travel Notes
AbstractThis paper comments on an editorial on the American crisis published in the New York Times by Professor Casey Mulligan, University of Chicago. According to Mulligan, the crisis is nothing more than a financial fluctuation: the banks should not be bailed out, other financial actors can take care of business investments, the delay in investment and consumption is not a big problem and public intervention is therefore useless. This paper argues, instead, that the current crisis is not primarily financial but originates from a prolonged shock that hit income distribution. The share of labour declined, while the share of capital increased. To sustain returns on capital it was necessary to force lending to consumers. In the short term both monetary and fiscal policy are needed, but in the mid-to-long run it is necessary to return to a more balanced income distribution.
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Bibliographic InfoArticle provided by Associazione Rossi Doria in its journal QA.
Volume (Year): (2009)
Issue (Month): 2 (May)
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More information through EDIRC
Financial and Economic Crisis; Banks Bail-Out; Income Distribution;
Find related papers by JEL classification:
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
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- Massimo Florio & Katiuscia Manzoni, 2004. "Abnormal returns of UK privatizations: from underpricing to outperformance," Applied Economics, Taylor & Francis Journals, vol. 36(2), pages 119-136.
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