Inequality, the Crisis and After

Jean-Paul Fitoussi and Francesco Saraceno

Rivista di Politica Economica, 2011, issue 1, 9-27

Abstract: Although the crisis emerged in the financial sector, its roots are deeper and lie in a structural change in income distribution that begun in the 1980s. The increase of inequality depressed aggregate demand by the middle-class, while the search for high returns by the wealthiest led to the emergence of bubbles. Net wealth became overvalued, and asset prices gave the false impression that high levels of debt were sustainable. We further argue that the trend of increasing inequality interacted differently with policies and institutions, to yield radically different outcomes in the US and in European countries before the onset of the crisis.

Keywords: financial crisis; income inequality; US and EU comparison; debt; aggregate demand (search for similar items in EconPapers)
JEL-codes: E21 E44 E63 F41 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (42)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Inequality, the Crisis and after (2011)
Working Paper: Inequality, the Crisis and after (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rpo:ripoec:y:2011:i:1:p:9-27

Access Statistics for this article

Rivista di Politica Economica is currently edited by Gustavo Piga

More articles in Rivista di Politica Economica from SIPI Spa
Bibliographic data for series maintained by Sabrina Marino ().