Advanced Search
MyIDEAS: Login to save this paper or follow this series

Distribution, 'financialisation' and the financial and economic crisis: Implications for post-crisis economic policies

Contents:

Author Info

  • Hein, Eckhard

Abstract

The severity of the financial and economic crisis which started in 2007 cannot be understood without examining the medium- to long-run developments in the world economy since the early 1980s. The following long-run causes for the crisis can be identified: inefficient regulation of financial markets, increasing inequality in the distribution of income, and rising imbalances at the global (and at the Euro area) level. The focus of the paper is on the changes in distribution triggered by 'finance-dominated capitalism' embedded in a 'neo-liberal' policy stance since the early 1980s. The three dimensions of re-distribution in the course of 'financialisation' and 'neo-liberalism' are examined: functional distribution, personal distribution and the development of top incomes. Since the development of functional income distribution is considered to be most important, the channels through which 'financialisation' and 'neo-liberalism' have contributed to the tendency of the labour income share to fall are identified, the effects of re-distribution on aggregate demand and growth are discussed, and the relationship between re-distribution at the expense of labour and regional (Euro area wide) and global current account imbalances are addressed. Finally, economic policy conclusions with respect to a sustainable income- or wage-led recovery strategy embedded in a 'Keynesian New Deal at the global and the European level' are drawn. --

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/59307/1/718105486.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Berlin School of Economics and Law, Institute for International Political Economy (IPE) in its series IPE Working Papers with number 09/2011.

as in new window
Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:zbw:ipewps:092011

Contact details of provider:
Web page: http://www.ipe-berlin.org/
More information through EDIRC

Related research

Keywords: Distribution; financialisation; global imbalances; financial and economic crisis; economic policy strategies;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Nathalie Girouard & Mike Kennedy & Christophe André, 2006. "Has the Rise in Debt Made Households More Vulnerable?," OECD Economics Department Working Papers 535, OECD Publishing.
  2. Bach, Stefan & Corneo, Giacomo & Steiner, Viktor, 2007. "From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992-2001," IZA Discussion Papers 2723, Institute for the Study of Labor (IZA).
  3. Soon Ryoo & Peter Skott, 2008. "Financialization in Kaleckian Economies with and without Labor Constraints," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 5(2), pages 357-386.
  4. Eckhard Hein & Lena Vogel, 2007. "Distribution and growth in France and Germany - single equation estimations and model simulations based on the Bhaduri/Marglin-model," IMK Working Paper 04-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  5. George Argitis & Christos Pitelis, 2001. "Monetary Policy and the Distribution of Income: Evidence for the United States and the United Kingdom," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 23(4), pages 617-638, July.
  6. Amitava Krishna Dutt, 2006. "Aggregate Demand, Aggregate Supply and Economic Growth," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 20(3), pages 319-336.
  7. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 32(3), pages 479-511, May.
  8. Jan Kregel, 2009. "Some Simple Observations on the Reform of the International Monetary System," Economics Policy Note Archive 09-8, Levy Economics Institute.
  9. Amit Bhaduri & Kazimierz Laski & Martin Riese, 2006. "A Model Of Interaction Between The Virtual And The Real Economy," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 412-427, 07.
  10. Engelbert Stockhammer & Eckhard Hein & Lucas Grafl, 2007. "Globalization and the effects of changes in functional income distribution on aggregate demand in Germany," Department of Economics Working Papers wuwp114, Vienna University of Economics, Department of Economics.
  11. Engelbert Stockhammer, 2000. "Financialization and the Slowdown of Accumulation," Working Papers, Vienna University of Economics Research Group: Growth and Employment in Europe: Sustainability and Competitiveness geewp14, Vienna University of Economics Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  12. Hyman P. Minsky, 1992. "The Financial Instability Hypothesis," Economics Working Paper Archive wp_74, Levy Economics Institute.
  13. Thomas I. Palley, 2008. "Financialization: What it is and Why it Matters," IMK Working Paper 04-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  14. Simon Mohun, 2006. "Distributive shares in the US economy, 1964--2001," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 30(3), pages 347-370, May.
  15. Eckhard Hein & Till Van Treeck, 2010. "Financialisation and Rising Shareholder Power in Kaleckian/Post-Kaleckian Models of Distribution and Growth," Review of Political Economy, Taylor & Francis Journals, Taylor & Francis Journals, vol. 22(2), pages 205-233.
  16. Stefan Ederer, 2008. "Competition-oriented Wage Policy and Its Effects on Aggregate Demand in the Netherlands," WIFO Working Papers, WIFO 312, WIFO.
  17. Engelbert Stockhammer & Stefan Ederer, 2007. "Demand effects of the falling wage share in Austria," Department of Economics Working Papers wuwp106, Vienna University of Economics, Department of Economics.
  18. Charles Whalen, 2008. "Understanding the Credit Crunch as a Minsky Moment," Challenge, M.E. Sharpe, Inc., vol. 51(1), pages 91-109, January.
  19. Till van Treeck, 2008. "The political economy debate on ‘financialisation’ – a macroeconomic perspective," IMK Working Paper 01-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  20. Peter Skott & Soon Ryoo, 2008. "Macroeconomic implications of financialisation," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 32(6), pages 827-862, November.
  21. Amit Bhaduri, 2011. "Financialization in the Light of Keynesian Theory," PSL Quarterly Review, Economia civile, Economia civile, vol. 64(256), pages 7-21.
  22. Cynamon Barry Z. & Fazzari Steven M., 2008. "Household Debt in the Consumer Age: Source of Growth--Risk of Collapse," Capitalism and Society, De Gruyter, De Gruyter, vol. 3(2), pages 1-32, October.
  23. Dorothy Power & Gerald Epstein, 2003. "Rentier Incomes and Financial Crises: An Empirical Examination of Trends and Cycles in Some OECD Countries," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp57, Political Economy Research Institute, University of Massachusetts at Amherst.
  24. Till van Treeck, 2007. "A Synthetic, Stock-Flow Consistent Macroeconomic Model of Financialisation," IMK Working Paper 06-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  25. Eckhard Hein & Engelbert Stockhammer, 2007. "Macroeconomic policy mix, employment and inflation in a Post-Keynesian alternative to the New Consensus Model," Department of Economics Working Papers wuwp110, Vienna University of Economics, Department of Economics.
  26. James R. Crotty, 1990. "Owner-Manager Conflict and Financial Theories of Investment Instability: A Critical Assessment of Keynes, Tobin, and Minsky," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 12(4), pages 519-542, July.
  27. Palma, J.G., 2009. "The Revenge of the Market on the Rentiers: Why neo-liberal Reports of the end of history turned out to be premature (Updated 19 December 2011)," Cambridge Working Papers in Economics 0927, Faculty of Economics, University of Cambridge.
  28. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
  29. Sydney Ludvigson & Charles Steindel, 1999. "How important is the stock market effect on consumption?," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Jul, pages 29-51.
  30. Marc Lavoie, 2009. "Cadrisme within a Post-Keynesian Model of Growth and Distribution," Review of Political Economy, Taylor & Francis Journals, Taylor & Francis Journals, vol. 21(3), pages 369-391.
  31. Eckhard Hein & Achim Truger, 2006. "Fiscal Policy and Macroeconomic Performance in the Euro area - Lessons for the Future," IMK Working Paper 07-2006, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  32. C. W.M. Naastepad & Servaas Storm, 2007. "OECD demand regimes (1960-2000)," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(2), pages 211-246, January.
  33. Eckhard Hein, 2006. "Interest, Debt and Capital Accumulation—A Kaleckian Approach," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 20(3), pages 337-352.
  34. Mario Cassetti, 2003. "Bargaining power, effective demand and technical progress: a Kaleckian model of growth," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 27(3), pages 449-464, May.
  35. Hein, Eckhard & Schoder, Christian, 2009. "Interest rates, distribution and capital accumulation – A Post-Kaleckian perspective on the US and Germany," MPRA Paper 18223, University Library of Munich, Germany.
  36. Eckhard Hein, 2008. "Shareholder value orientation, distribution and growth – short- and medium-run effects in a Kaleckian model," Department of Economics Working Papers wuwp120, Vienna University of Economics, Department of Economics.
  37. Till van Treeck & Thomas Dallery, 2008. "Conflicting claims and equilibrium adjustment processes in a stock-flow consistent macro model," IMK Working Paper 09-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  38. Robert Wade, 2009. "From global imbalances to global reorganisations," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 33(4), pages 539-562, July.
  39. Eckhard Hein & Artur Tarassow, 2008. "Distribution, aggregate demand and productivity growth - theory and empirical results for six OECD countries based on a Post-Kaleckian model," IMK Working Paper 18-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  40. Amit Bhaduri, 2006. "Endogenous economic growth: a new approach," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 30(1), pages 69-83, January.
  41. Eckhard Hein, 2007. "Interest Rate, Debt, Distribution And Capital Accumulation In A Post-Kaleckian Model," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 310-339, 05.
  42. Engelbert Stockhammer, 2007. "Some Stylized Facts on the Finance-Dominated Accumulation Regime," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp142, Political Economy Research Institute, University of Massachusetts at Amherst.
  43. Amitava Krishna Dutt, 2006. "Maturity, Stagnation And Consumer Debt: A Steindlian Approach," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 339-364, 07.
  44. Eckhard Hein, 2009. "A (Post-) Keynesian perspective on "financialisation"," IMK Studies 01-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  45. Christian Dreger & Jiri Slacalek, 2007. "Finanzmarktentwicklung, Immobilienpreise und Konsum," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 74(35), pages 533-536.
  46. Eckhard Hein & Achim Truger, 2006. "Monetary policy, macroeconomic policy mix and economic performance in the Euro area," IMK Working Paper 06-2006, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  47. A. B. Atkinson, 2009. "Factor shares: the principal problem of political economy?," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 25(1), pages 3-16, Spring.
  48. Marvin Goodfriend & Robert King, 1997. "The New Neoclassical Synthesis and the Role of Monetary Policy," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 231-296 National Bureau of Economic Research, Inc.
  49. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, American Economic Association, vol. 96(2), pages 200-205, May.
  50. �zlem Onaran & Engelbert Stockhammer & Lucas Grafl, 2011. "Financialisation, income distribution and aggregate demand in the USA," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 35(4), pages 637-661.
  51. Robert Guttmann, 2009. "Asset Bubbles, Debt Deflation, and Global Imbalances," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 38(2), pages 46-69, July.
  52. Ian Dew-Becker & Robert J. Gordon, 2005. "Where Did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income," NBER Working Papers 11842, National Bureau of Economic Research, Inc.
  53. Engelbert Stockhammer, 2006. "Shareholder value orientation and the investment-profit puzzle," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 28(2), pages 193-215, January.
  54. C. W. M. Naastepad, 2006. "Technology, demand and distribution: a cumulative growth model with an application to the Dutch productivity growth slowdown," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 30(3), pages 403-434, May.
  55. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 8(1), pages 25-40, March.
  56. Hein, Eckhard & Truger, Achim, 2010. "Finance-dominated capitalism in crisis – the case for a Global Keynesian New Deal," MPRA Paper 21175, University Library of Munich, Germany.
  57. Engelbert Stockhammer, 2009. "Determinants of functional income distribution in OECD countries," IMK Studies 05-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  58. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 14(4), pages 375-93, December.
  59. Atkinson, A-B, 1996. "Bringing Income Distribution in from the Cold," Economics Papers 117, Economics Group, Nuffield College, University of Oxford.
  60. Eckhard Hein & Achim Truger & Till van Treeck, 2011. "The European Financial and Economic Crisis: Alternative Solutions from a (Post-) Keynesian Perspective," IMK Working Paper 9-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  61. Robert J. Gordon & Ian Dew-Becker, 2007. "Selected Issues in the Rise of Income Inequality," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(2), pages 169-192.
  62. Amit Bhaduri, 2010. "A Contribution to the Theory of Financial Fragility and Crisis," Economics Working Paper Archive wp_593, Levy Economics Institute.
  63. Eckhard Hein & Achim Truger, 2009. "How to Fight (or Not to Fight) a Slowdown," Challenge, M.E. Sharpe, Inc., vol. 52(3), pages 52-75, May.
  64. Marc Lavoie, 2008. "Financialisation Issues in a Post-Keynesian Stock-flow Consistent Model," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 5(2), pages 331-356.
  65. Rowthorn, R E, 1977. "Conflict, Inflation and Money," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 1(3), pages 215-39, September.
  66. Eckhard Hein & Marc Lavoie & Till van Treeck, 2012. "Harrodian Instability And The ‘Normal Rate’ Of Capacity Utilization In Kaleckian Models Of Distribution And Growth—A Survey," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 63(1), pages 139-169, 02.
  67. Eckhard Hein & Marc Lavoie & Till van Treeck, 2011. "Some instability puzzles in Kaleckian models of growth and distribution: a critical survey," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 35(3), pages 587-612.
  68. Amit Bhaduri, 2010. "A Contribution to the Theory of Financial Fragility and Crisis," wiiw Working Papers 65, The Vienna Institute for International Economic Studies, wiiw.
  69. Engelbert Stockhammer & �zlem Onaran & Stefan Ederer, 2009. "Functional income distribution and aggregate demand in the Euro area," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 33(1), pages 139-159, January.
  70. Eckhard Hein, 2012. ""Financialization," distribution, capital accumulation, and productivity growth in a post-Kaleckian model," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 34(3), pages 475-496, April.
  71. Laurence Boone & Nathalie Girouard, 2002. "The Stock Market, the Housing Market and Consumer Behaviour," OECD Economic Studies, OECD Publishing, vol. 2002(2), pages 175-200.
  72. Eckhard Hein & Carsten Ochsen, 2003. "Regimes of Interest Rates, Income Shares, Savings and Investment: A Kaleckian Model and Empirical Estimations for some Advanced OECD Economies," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 54(4), pages 404-433, November.
  73. Yash P. Mehra, 2001. "The wealth effect in empirical life-cycle aggregate consumption equations," Economic Quarterly, Federal Reserve Bank of Richmond, Federal Reserve Bank of Richmond, issue Spr, pages 45-67.
  74. Eckhard Hein & Achim Truger, 2006. "Germany's post-2000 stagnation in the European context - a lesson in macroeconomic mismanagement," IMK Working Paper 03-2006, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  75. Till van Treeck, 2008. "Reconsidering The Investment-Profit Nexus In Finance-Led Economies: An Ardl-Based Approach," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 59(3), pages 371-404, 07.
  76. Adalmir Marquetti, 2004. "Do Rising Real Wages Increase The Rate Of Labor-Saving Technical Change? Some Econometric Evidence," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 55(4), pages 432-441, November.
  77. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(1), pages 1-39, February.
  78. Petra Dünhaupt & Eckhard Hein & Till van Treeck, 2007. "Finanzsystem und wirtschaftliche Entwicklung: Tendenzen in den USA und in Deutschland aus makroökonomischer Perspektive," IMK Studies 05-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  79. Erik Klär & Jiri Slacalek, 2006. "Entwicklung der Sparquote in Deutschland: Hindernis für die Erholung der Konsumnachfrage," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 73(40), pages 537-543.
  80. L. Randall Wray, 2009. "Money Manager Capitalism and the Global Financial Crisis," Economics Working Paper Archive wp_578, Levy Economics Institute.
  81. Thomas I. Palley, 1994. "Debt, Aggregate Demand, and the Business Cycle: An Analysis in the Spirit of Kaldor and Minsky," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 16(3), pages 371-390, April.
  82. Jorg Bibow, 2008. "The International Monetary (Non-)Order and the 'Global Capital Flows Paradox'," Economics Working Paper Archive wp_531, Levy Economics Institute.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Total disconnect – new data on super rich by the Tax Justice Network
    by Dirk in econoblog101 on 2012-08-01 15:07:08
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Thomas Goda, 2013. "The role of income inequality in crisis theories and in the subprime crisis," Working Papers, Post Keynesian Economics Study Group (PKSG) PKWP1305, Post Keynesian Economics Study Group (PKSG).
  2. Thomas Goda, 2013. "Changes in income inequality from a global perspective: an overview," Working Papers, Post Keynesian Economics Study Group (PKSG) PKWP1303, Post Keynesian Economics Study Group (PKSG).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:ipewps:092011. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.