This chapter begins by acknowledging the growing recent literature examining the macroeconomic implications of household debt linking it to rising inequality across developed economies, which in turn contributes to stagnant or declining real incomes for middle and lower income households. Wages stagnated with their decoupling from productivity growth and rising inequality; households maintained consumption with falling savings and rising indebtedness. This consumption behaviour can be understood in terms of the emulation of consumption patterns through a relative income effect. A range of authors have argued household debt was central to the global financial crisis. More generally it has been argued that with rising inequality, aggregate demand was only being sustained by rising household indebtedness before the crisis, and since then held back by limited growth in household incomes. Thus, economies are prone to stagnation offset by periodic unsustainable credit booms. To date, though, specific studies have focused almost exclusively on the US. There are a number of reasons why it may be useful to extend this analysis to European economies, allowing comparative tests of key hypotheses in this field. This paper provides a comparative analysis across European economies to test the key hypotheses here, examining how far changes in inequality across these economies can explain debt levels and how far aggregate demand was sustained by rising household debt.
During the 1990s and 2000s ‘globalisation’ became arguably the buzzword of the times. For all its resonance in academic and popular discourse, ‘globalisation’ often remained a vague and elusive concept. Globalisation has been widely used to refer to sharp increases in levels of international economic flows since the 1970s. Using various definitions, authors have typically claimed either that it heralds the demise of the nation state or that it amounts to nothing new. This chapter proposes an analytic approach to globalisation, argues that available evidence does point to a fundamental transformation in the world economy, which in key respects is unprecedented, and draws implications for nation states and the welfare of their citizens.
Giuseppe Fontana, Mark (M.G.) Hayes and Jonathan Perraton
The contributions in this special issue on inflation targeting were presented at the Spring Seminar of the Post Keynesian Economics Study Group (PKSG) held at Balliol College, Oxford (UK) in April 2008. PKSG was founded in 1988 by Philip Arestis and Victoria Chick. The purpose of the Study Group (now formally a professional association) is to encourage collaboration among scholars and students of Post Keynesian economics, defined broadly as economics centred on the principle of effective demand. A detailed account of the history of PKSG can be found in Hayes (2008).