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Till van Treeck

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Till van Treeck

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Till van Treeck

This article focuses on the macroeconomic implications of inequality by identifying four themes on which there seems to be growing consensus among many economists, especially in the various heterodox traditions, but also increasingly in the mainstream of the economics profession. The first theme on which there is growing consensus is the notion that the rise in inequality has contributed in an important way to the unsustainable rise in household debt in the United States and ultimately the financial and economic crisis starting in 2007. Second, there is the by-now widely held view that rising inequality at the international level has contributed to the so-called global imbalances in terms of national current-account positions. Third, there has recently been a shift in the focus of attention from merely looking at income inequality to analysing the longer-term implications of income inequality for wealth inequality. Fourth, the argument has been made that a high level of inequality can, generally speaking, be a cause of low economic growth, or even secular stagnation. The article gives a broad and non-technical overview on how these issues can be seen to be linked.

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Torsten Niechoj and Till van Treeck

First paragraph

The financial market crisis that transformed into a global recession is a challenge for both economic theory and policy. In retrospect, nearly three years after the first signs of the crisis, a few tentative conclusions concerning the appropriateness and effectiveness of the responses to the crisis might be possible. After an initial state of shock, the political system acted forcefully and issued programmes to stabilise both financial sector and the real economy all over the world. Moreover, governments started to talk about an encompassing regulation of the financial sector, which was supported by many economists. This is indeed remarkable compared to what used to be common sense in the years before within advisory bodies – among others the European Commission, the IMF and academic think tanks. Privatisation and liberalisation of markets were, then, thought to be key to increasing the capacity of the economy to absorb shocks and to guarantee high growth rates and economic well-being. Although in that respect politicians and economists obviously did learn from the crisis and began to take seriously alternative ideas which had for a long time been absent in the debates, a ›return to normality‹ is already imminent; the planned fiscal retrenchment programmes, particularly within the European Union, and the deferral of regulatory measures for financial markets are testament to this. The king is dead, long live the king? From today's view it is not clear whether or not, in the longer run, this crisis has really shaken the foundations of economic thinking and policy making.

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Editorial

The state of economics after the crisis

Edited by Sebastian Dullien, Eckhard Hein and Till van Treeck

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Gregor Semieniuk, Till van Treeck and Achim Truger

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Editorial

The jobs crisis: causes, cures, constraints

Özlem Onaran, Miriam Rehm, Till van Treeck and Andrew Watt

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Editorial

Inequality and the future of capitalism

Sebastian Gechert, Achim Truger, Till van Treeck and Andrew Watt