Inequality, Leverage, and Crises
The paper studies how high household leverage and crises can be caused by changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of high-income households, a large increase in debt leverage of low-and middle-income hou...
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| Veröffentlicht in: | The American economic review 2015-03, Vol.105 (3), p.1217-1245 |
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| container_title | The American economic review |
| container_volume | 105 |
| creator | Kumhof, Michael Rancière, Romain Winant, Pablo |
| description | The paper studies how high household leverage and crises can be caused by changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of high-income households, a large increase in debt leverage of low-and middle-income households, and an eventual financial and real crisis. The paper presents a theoretical model where higher leverage and crises are the endogenous result of a growing income share of high-income households. The model matches the profiles of the income distribution, the debt-to-income ratio and crisis risk for the three decades preceding the Great Recession. |
| doi_str_mv | 10.1257/aer.20110683 |
| format | Article |
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| ispartof | The American economic review, 2015-03, Vol.105 (3), p.1217-1245 |
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| language | eng |
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| source | Business Source Complete; Jstor Complete Legacy; American Economic Association Web |
| subjects | Calibration Consumer economics Debt Debt restructuring Debt to income ratios Economic analysis Economics Economics and Finance Financial crisis Financial leverage Great Depression Great Recession Households Humanities and Social Sciences Income distribution Income inequality Income shares Loan defaults Macroeconomics Personal debt Personal finance Ratios Recession Recessions Risk theory Stochastic models Studies |
| title | Inequality, Leverage, and Crises |
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