Edited by Hassan Bougrine and Louis-Philippe Rochon
Chapter 5: Household debt and the rentier share of income
This chapter explores and develops research by Mario Seccareccia on household credit, and by Marc Lavoie and Mario Seccareccia on the rentier share of income. Seccareccia looks at household finances in terms of net lending/borrowing positions, exploring the effects of new household borrowing on the monetary circuit and on the rentierization of the economy. Based on this framework, the chapter discusses changes in the policy context and in the distribution and uses of household debt in the USA. In addition, it looks at how this phenomenon has influenced the distribution of income between non-financial and financial (rentier) sectors, through the interest-rate channel. To do so, the author uses a modified version of the Pasinetti index put forward by both authors, substituting the ten-year Treasury bill rate benchmark with an effective interest rate that is a weighted average of the rates applied to a number of different loans, including personal loans and mortgages. Finally, the chapter briefly discusses policy implications.
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