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Income Distribution and Household Debt Dynamics under Kaleckian Pricing: A Dynamic Panel Reassessment of Selected Eurozone Economies

Author

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  • Houssam Boughabi

Abstract

This paper reassesses whether household credit operates as a debt-led stabilizer of consumption under Kaleckian mark-up pricing. A compact Kaleckian-Minskyan framework links administered prices to real-wage compression, distributional pressure, credit-financed consumption and financial fragility. Using annual World Development Indicators data for Belgium, France, Germany, Italy, the Netherlands and Spain, the paper constructs real consumption, private-credit and distributional proxies and estimates two-way fixed-effects, country-specific HAC and IV-style robustness specifications. The evidence is sharp but cautious: real GDP growth is the only robust driver of consumption growth in the full panel, while lagged credit growth and distributional proxies are not statistically stable. Spain shows a country-specific debt effect. Debt-led demand stabilization is therefore institutionally contingent, not a uniform Eurozone mechanism.

Suggested Citation

  • Houssam Boughabi, 2026. "Income Distribution and Household Debt Dynamics under Kaleckian Pricing: A Dynamic Panel Reassessment of Selected Eurozone Economies," Working Papers PKWP2623, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp2623
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    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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