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Inequality, Debt and Taxation: The Perverse Relation between the Productive and the Non-Productive Assets of the Economy

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Author Info

  • Mario Amendola

    (Università degli Studi di Roma 'La Sapienza')

  • Jean-Luc Gaffard

    (OFCE Sciences Po
    Skema Business School
    University of Nice-Sophia Antipolis, France)

  • Fabrizio Patriarca

    (Università degli Studi di Roma 'La Sapienza')

Abstract

The explosion of the global financial crisis in 2008 and its transmission to the real economies have been interpreted as calling for new kinds of regulation of the banking and the financial systems that would have allowed reestablishing a virtuous relation between the real and the financial sectors of the economy. In this paper we maintain the different view that the financial crisis and the ensuing real crisis have roots in the strong increase in incomes inequality that has been taking place in the Western world in the last thirty years or so. This has created an all around aggregate demand deficiency crisis that has strongly reduced prospects and opportunities for investments in productive capacities and shifted resources toward other uses, thus feeding a perverse relation between the productive and the non-productive assets of the economy. In this context the way out of the crisis is re-establishing the right distributive conditions: which cannot be obtained by a policy aimed at relieving the weight of private debts but calls for a redistribution through taxes on the incomes of non-productive sectors, according to a fine tuning that should prevent from excessive taxations transforming positive into negative effects.

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File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2013-36.pdf
File Function: First version, 2013
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Bibliographic Info

Paper provided by Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis in its series GREDEG Working Papers with number 2013-36.

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Length: 35 pages
Date of creation: Oct 2013
Date of revision:
Handle: RePEc:gre:wpaper:2013-36

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Keywords: Assets; debt; inequality; taxation;

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References

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  1. Frank Levy & Peter Temin, 2007. "Inequality and Institutions in 20th Century America," NBER Working Papers 13106, National Bureau of Economic Research, Inc.
  2. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, vol. 96(2), pages 200-205, May.
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Cited by:
  1. Mario Amendola & Jean-Luc Gaffard, 2014. "Novelty, Hysteresis, and Growth," Sciences Po publications 2014-12, Sciences Po.

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