“…Contrary to what we assume here, for Wunder (), rentiers tend to increase their propensity to save during recessions. Wunder () explains that rentiers try to offset the fall in their wealth by increasing their savings. As soon as their wealth to income ratio has recovered to the precrisis level, rentiers return to their precrisis propensity to save.…”
Section: An Alternative Proposal: the Role Of Rentierscontrasting
confidence: 95%
“…In short, unlike rentiers who decrease their propensity to save during recessions, workers seem to raise their propensity to save, be it voluntarily (precautionary saving) or not (credit restrictions). At the aggregate level, Maki and Palumbo () and Wunder (, p. 183) argue that, in the United States, the macroeconomic propensity to save is determined by the behaviour of rentiers, since, because of rising inequality, their income weighs more than low‐income households on changes in aggregate income: the consumption decisions of the top and second highest quintiles may account for much of what is happening in the economy today. Together these top two quintiles accounted for 70% of the GDP controlled by households.…”
Section: An Alternative Proposal: the Role Of Rentiersmentioning
confidence: 99%
“…As soon as their wealth to income ratio has recovered to the precrisis level, rentiers return to their precrisis propensity to save. For Wunder (), recessions lead first to an increase in the propensity to save of rentiers, and then to a decline in this propensity so as to return to the normal situation.…”
Section: An Alternative Proposal: the Role Of Rentiersmentioning
International audienceThis article analyses the Keynesian multiplier from a new perspective. Recent empirical studies emphasize that the multiplier is endogenous to the level of economic activity, increasing during recessions and declining in expansions. Here, we propose a plausible explanation for this established fact based on the procyclicality of capitalists' propensity to save. Then, using a standard Kaleckian model of growth and distribution, we perform some simple simulations showing that fiscal multipliers increase during turbulent times. Consequently, this argues against cutting public spending for economies in recession
“…Contrary to what we assume here, for Wunder (), rentiers tend to increase their propensity to save during recessions. Wunder () explains that rentiers try to offset the fall in their wealth by increasing their savings. As soon as their wealth to income ratio has recovered to the precrisis level, rentiers return to their precrisis propensity to save.…”
Section: An Alternative Proposal: the Role Of Rentierscontrasting
confidence: 95%
“…In short, unlike rentiers who decrease their propensity to save during recessions, workers seem to raise their propensity to save, be it voluntarily (precautionary saving) or not (credit restrictions). At the aggregate level, Maki and Palumbo () and Wunder (, p. 183) argue that, in the United States, the macroeconomic propensity to save is determined by the behaviour of rentiers, since, because of rising inequality, their income weighs more than low‐income households on changes in aggregate income: the consumption decisions of the top and second highest quintiles may account for much of what is happening in the economy today. Together these top two quintiles accounted for 70% of the GDP controlled by households.…”
Section: An Alternative Proposal: the Role Of Rentiersmentioning
confidence: 99%
“…As soon as their wealth to income ratio has recovered to the precrisis level, rentiers return to their precrisis propensity to save. For Wunder (), recessions lead first to an increase in the propensity to save of rentiers, and then to a decline in this propensity so as to return to the normal situation.…”
Section: An Alternative Proposal: the Role Of Rentiersmentioning
International audienceThis article analyses the Keynesian multiplier from a new perspective. Recent empirical studies emphasize that the multiplier is endogenous to the level of economic activity, increasing during recessions and declining in expansions. Here, we propose a plausible explanation for this established fact based on the procyclicality of capitalists' propensity to save. Then, using a standard Kaleckian model of growth and distribution, we perform some simple simulations showing that fiscal multipliers increase during turbulent times. Consequently, this argues against cutting public spending for economies in recession
“…As Timothy A. Wunder (2012) argued, unequal household incomes can generate disparities in consumption and savings behaviors. For the top earning households, increased incomes lead to increasing savings, while for lowest earners, it can lead to an increased debt as a result of trying to maintain consumption expenditures (Holt and Greenwood 2010;Wisman 2009).…”
Section: Finding the Causes Of The Eurozone Debt Growthmentioning
Abstract:The political and economic crisis in Europe is often viewed as an indirect consequence of the global financial and economic breakdowns caused by the US "subprime" crisis. European governments themselves tend to underestimate Europe's responsibility for the crisis and seem to prefer to manage the symptoms of the crisis rather than pursue a real recovery from it. This paper argues that the enforced policies are far from achieving an appropriate economic solution for the Eurozone. Moreover, it suggests that, although the European domestic debt situation is very close to the American one, their most recent evolutions and their main causes differ. If the growth of the American debt can partly be explained by macroeconomics imbalances, the causes of the growth of the European domestic debt must be found in a change in the behavior of the financial sector agents. The conclusion advocates for a more radical European policy to solve the debt bubble.
“…Likewise, focusing on the United States, different authors consider growing income inequalities that contributed to the recent crisis (e.g. Brown 2008; Barba and Pivetti 2009;Wisman 2009Wisman , 2013Holt 2010, 2012;Rajan 2010;Wunder 2012;Cynamon and Fazzari 2016;Scott and Pressman 2015).…”
Portuguese household debt increased above GDP between 2000 and 2007. This article uses conspicuous consumption to explain credit demand dynamics. The author develops an institutionalist framework and consider how rapid high inequalities and increasing top income share favored conspicuous consumption and climbing household debt.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
