Household Debt, Dynamic Stability, and Change in Demand Creation Patterns
This paper examines dynamic stability and demand creation patterns of an economy in the context of the augmentation of household debt. First, we investigate the dynamic characteristics specific to an economy with household borrowing. Second, we reveal how demand creation and economic growth pattern change with the introduction of households' active borrowing. Our results shows that it is more favorable for the stability of an economy to politically control the interest rate on lending rather than to leave it to be determined by private financial institutions. Our results also indicate that even if the demand regime is wage-led, paradoxically, a rise in wage share may not necessarily stimulate economic growth. On the other hand, profit-led growth is more likely.
Volume (Year): 24 (2012)
Issue (Month): 4 (October)
|Contact details of provider:|| Web page: http://www.tandfonline.com/CRPE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CRPE20|
When requesting a correction, please mention this item's handle: RePEc:taf:revpoe:v:24:y:2012:i:4:p:607-622. 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: (Chris Longhurst)
If references are entirely missing, you can add them using this form.