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Negative Trickle-Down and the Financial Crisis of 2008

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  • Richard Holt
  • Daphne Greenwood

Abstract

Substantial increases in income inequality contributed to the financial crisis of 2008 according to many researchers. We focus here on negative externalities from inequality that make financial well-being decline more rapidly than real income measures indicate. Housing, with its relatively inelastic supply, relationship to local public goods, role in establishing status and dependence on mortgage finance is used to illustrate the negative trickle-down effect. Increasing concentration of economic power results in political power that alters the regulatory structure. Along with contributing to financial instability and sluggish recovery this is an additional negative externality.

Suggested Citation

  • Richard Holt & Daphne Greenwood, 2012. "Negative Trickle-Down and the Financial Crisis of 2008," Journal of Economic Issues, Taylor & Francis Journals, vol. 46(2), pages 363-370.
  • Handle: RePEc:mes:jeciss:v:46:y:2012:i:2:p:363-370
    DOI: 10.2753/JEI0021-3624460211
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    Cited by:

    1. Rafael Wildauer, 2016. "Determinants of US household debt: New evidence from the SCF," Working Papers PKWP1608, Post Keynesian Economics Society (PKES).
    2. Yew-Kwang Ng, 2014. "Why Is Finance Important? Some Thoughts On Post-Crisis Economics," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(05), pages 1-20.
    3. Stefania Gabriele & Enrico D’Elia, 2019. "Labour and capital remuneration in the OECD countries," Working Papers LuissLab 19146, Dipartimento di Economia e Finanza, LUISS Guido Carli.

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