The emergence of debt and secular stagnation in an unequal society: a stockflow consistent agent-based approach

Claudius Graebner-Radkowitsch (), Anna Hornykewycz and Bernhard Schuetz
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Claudius Graebner-Radkowitsch: Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; ZOE Institute for future-fit Economies, Bonn, Germany; International lnstitute of Management and Economic Education, Europa-Universitaet Flennsburg, Germany, https://claudius-graebner.com/
Bernhard Schuetz: Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria
Authors registered in the RePEc Author Service: Bernhard Schütz and Claudius Gräbner-Radkowitsch

No 135, ICAE Working Papers from Johannes Kepler University, Institute for Comprehensive Analysis of the Economy

Abstract: We use an agent-based stock-flow consistent model of a closed economy without technological change that considers different classes of households, status consumption and a Minskyan banking sector to analyze the relationship between rising saving rates, the accumulation and distribution of private financial wealth and the evolution of public debt. Conducting a series of experiments, we find evidence for Keynes’ famous claim that a rise in the propensity to save will not necessarily be matched by a rise in the propensity to invest, culminating in either chronic government deficits or consistently high unemployment rates if the government refuses to accept those deficits. The result emerges endogenously from the interaction of fully decentralized agents. The model indicates that promoting consumer credit can at best provide a very short-lived relief to this problem.

Keywords: propensity to save; wealth accumulation; public debt; unequal distribution of income and wealth; consumer credit; household bankruptcy; agent-based stock-flow consistent modeling (search for similar items in EconPapers)
Pages: 34 pages
Date: 2022-01
New Economics Papers: this item is included in nep-ban, nep-hme and nep-pke
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ico:wpaper:135

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