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Inequality, Leverage, and Crises
Open accessAbstract
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. (JEL D14, D31, D33, E32, E44, G01, N22)
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Cited by
O’Neill, B. C., Kriegler, E., Ebi, K. L., Kemp-Benedict, E., Riahi, K., Rothman, D. S., van Ruijven, B. J., van Vuuren, D. P., Birkmann, J., Kok, K., et al. (2017) · Global Environmental Change · doi:10.1016/j.gloenvcha.2015.01.004 · Cited by 3,359
Financial development and income inequality: a panel data approach
Jauch, S., & Watzka, S. (2016) · Empirical Economics · doi:10.1007/s00181-015-1008-x · Cited by 372
CENTRAL BANK POLICIES AND INCOME AND WEALTH INEQUALITY: A SURVEY
Colciago, A., Samarina, A., & de Haan, J. (2019) · Journal of Economic Surveys · doi:10.1111/joes.12314 · Cited by 284
Household Debt: Facts, Puzzles, Theories, and Policies
Zinman, J. (2015) · Annual Review of Economics · doi:10.1146/annurev-economics-080614-115640 · Cited by 165
Sharing the growth dividend: analysis of inequality in Asia
IMF, U., Jain-Chandra, S., Kinda, T., IMF, U., Kochhar, K., IMF, U., Piao, S., Ant Financial Services Group, C., Schauer, J., & IMF, U. (2019) · Journal of Banking and Financial Economics · doi:10.7172/2353-6845.jbfe.2019.2.1 · Cited by 15
Metadata
- Authors
- Kumhof, M., Rancière, R., & Winant, P.
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2015-03-01
- Volume
- 105
- Issue
- 3
- Pages
- 1217-1245
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W2097587161
- Cited by
- 664
- References
- 0
- FWCI
- 196.03
- Type
- journal article
- Language
- en
- Open access
- bronze
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- Kumhof, M., Rancière, R., & Winant, P. (2015). Inequality, Leverage, and Crises. American Economic Review. https://doi.org/10.1257/aer.20110683
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
