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The Simple Analytics of Debt-driven Business Cycles

In: Financialization

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  • Thomas I. Palley

    (AFL-CIO)

Abstract

Chapter 3 presented a static stages of development model of financial-ization. A key feature was increasing debt and debt burdens in both the household and corporate sector. This chapter explores how debt can give rise to boom–bust business cycles.

Suggested Citation

  • Thomas I. Palley, 2013. "The Simple Analytics of Debt-driven Business Cycles," Palgrave Macmillan Books, in: Financialization, chapter 4, pages 62-81, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-26582-1_4
    DOI: 10.1057/9781137265821_4
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    References listed on IDEAS

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    6. Amitava Krishna Dutt, 2006. "Maturity, Stagnation And Consumer Debt: A Steindlian Approach," Metroeconomica, Wiley Blackwell, vol. 57(3), pages 339-364, July.
    7. Palley, Thomas I, 1997. "Expected Aggregate Demand, the Production Period and the Keynesian Theory of Aggregate Supply," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(3), pages 295-309, June.
    8. Palley, Thomas I., 1999. "General disequilibrium analysis with inside debt," Journal of Macroeconomics, Elsevier, vol. 21(4), pages 785-803.
    9. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    10. Palley, Thomas I, 1996. "Inside Debt, Aggregate Demand, and the Cambridge Theory of Distribution," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 20(4), pages 465-474, July.
    11. Caskey, John & Fazzari, Steven M, 1987. "Aggregate Demand Contractions with Nominal Debt Commitments: Is Wage Flexibility Stabilizing?," Economic Inquiry, Western Economic Association International, vol. 25(4), pages 583-597, October.
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    More about this item

    Keywords

    Business Cycle; Asset Price; Aggregate Demand; Debt Service; Investment Spending;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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