Income Distribution, Household Debt, and Aggregate Demand: A Critical Assessment

The paper provides a critical assessment of an authoritative study “From Soviets to oligarchs” (2017) on evolution of economic inequality in Russia by F. Novokmet, T. Piketty and G. Zucman where Russia is portrayed as a country with abnormally polarized income distribution by international standards. The author examines main quantitative results obtained by Piketty’s team, describes peculiar methodological features of their measuring procedure and analyzes how they dissect available empirical data sets. A general conclusion is that the trio uses an unconventional methodology that does not allow to apply equivalence scales; their argument suffers from internal inconsistencies (different units of observation and different definitions of income are used); they misunderstand the nature of data that form a base for their calculations (simulated estimates are perceived as raw survey data, post-tax incomes as pretax ones, etc.); deduction and declaration coefficients that they impose on tax data are empirically improbable; their final estimates of income inequality for Russia are higher than empirically realistic ones approximately by one third (Gini coefficients 0.5—0.6 instead of 0.3—0.4 by other researchers).

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Effects of Shifts of Aggregate Demand upon Income Distribution

American Journal of Agricultural Economics ◽

10.2307/1237545 ◽

1968 ◽

Vol 50 (2) ◽

pp. 328-339 ◽

Cited By ~ 16

Author(s):

Hyman P. Minsky

Keyword(s):

Income Distribution ◽

Aggregate Demand

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GLI INSEGNAMENTI DELLA CRISI

Istituto Lombardo - Accademia di Scienze e Lettere - Incontri di Studio ◽

10.4081/incontri.2015.236 ◽

2016 ◽

Author(s):

Roberto Artoni

Keyword(s):

Aggregate Demand ◽

Household Debt ◽

Economic Policies ◽

Economic Crises ◽

Strong Polarization ◽

Financial Deregulation ◽

Distribution Of Income

History shows that the major economic crises in the last century were triggered by three factors closely interconnected: financial deregulation, leading to irresponsibility of the intermediaries; strong polarization in the distribution of income usually associated with a huge rise in household debt; economic policies unable of keeping aggregate demand at a level corresponding to an adequate utilization of resources. Governments should both avoid the insurgence of the crises and solve them through suitable policies.

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An assessment of the debates over income distribution and growth in the Neo-Kaleckian literature

Brazilian Journal of Political Economy ◽

10.1590/0101-31572021-3165 ◽

2021 ◽

Vol 41 (4) ◽

pp. 782-796

Author(s):

SULAFA NOFAL

Keyword(s):

Economic Growth ◽

Financial Crisis ◽

Income Distribution ◽

Aggregate Demand ◽

Economic Thought ◽

Theoretical Discussion ◽

Distributional Effects ◽

Economic Issues ◽

The Impact ◽

Distribution Of Income

ABSTRACT Kaleckian literature is considered an important theme in the post-Keynesian school of economic thought. In the aftermath of the financial crisis, the endeavors of forming a new consensus regarding essential economic issues, in particular achieving economic growth became a need. Thus, the Kaleckian models returned to be in the spot since these models tackle the impact of changes in the distribution of income and address the question whether a redistribution of income away from wages and towards profits is capable of boosting growth. In this sense, this paper return to Kaleckian insights and offers a theoretical discussion of the distributional effects on aggregate demand and economic growth. Moreover, through the lens of neo-Kaleckian tradition, the evolution of the debate on wage-led and profit-led regimes in recent decades can be traced.

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Household Debts: Global Experience of Restructuring Debts and Ukrainian Reality

THE PROBLEMS OF ECONOMY ◽

10.32983/2222-0712-2021-2-194-202 ◽

2021 ◽

Vol 2 (48) ◽

pp. 194-202

Author(s):

V. O. Kornіvska ◽

◽

O. L. Yaremenko ◽

Keyword(s):

Social Context ◽

Aggregate Demand ◽

The State ◽

Public Utility ◽

Financial Behavior ◽

Household Debt ◽

Support Design ◽

Debt Restructuring ◽

Moral Hazards ◽

The Government

The research results on the global problem of household debt growth, its causes, consequences, social context, and influence on the formation of aggregate demand are presented. It is substantiated that with the growth of debts, households are losing their share in aggregate demand, and the state is becoming an increasingly influential player compared to others due to the strengthening of fiscal and regulatory government influence. Facing the increasing debt pressure, households start reducing consumption, thus negatively affecting aggregate demand. The government, on its part, trying to improve the situation, increases subsidies and provides policies that encourage banks to restructure loans, develops restructuring programs, etc. These trends are proven to be of an urgent character and should not be routinized, in order not to distort the market environment or increase the direct influence of the state on purely market processes. The analysis of global experience, carried out in the article, shows that in the condition of economic destabilization debt restructuring is the only way to help the population out of the debt trap. Special attention is paid to the analysis of the ways to harmonize the accumulation of household debt through restructuring, to identify its market mechanisms, and to prove that the state should provide extensive assistance to households trying to overcome the debt trap. Three options for the state participation in the restructuring process have been identified: institutional participation (when the state only provides regulatory support); design and implementation of state restructuring programs; adoption of regulations on compulsory restructuring. New Ukrainian norms and regulations related to forced debt restructuring are analyzed, and their social context is proved to be contradictory. On the one hand, the adoption of corresponding laws became a significant step towards maintaining the social stability of the Ukrainian population against the background of the growing poverty and increasing total indebtedness of the people (even in the sphere of payments for public utility services), and the growing currency risks. On the other hand, Ukrainian market players often show moral hazards of non-compliance with the conditions of debt discipline, which have become part of the financial behavior, negatively affecting the general financial culture.

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