When Melius Abundare Is No Longer True: Excessive Financialization and Inequality as Drivers of Stagnation
Riccardo Pariboni,
Walter Paternesi Meloni and
Pasquale Tridico
Review of Political Economy, 2020, vol. 32, issue 2, 216-242
Abstract:
The apparently never-ending phase of economic slowdown that advanced economies have been experiencing in recent decades has recently contributed to the resurrection of the hoary old argument of ‘secular stagnation’. In this paper, situated intellectually within the strand of research documenting the negative impact on growth of inequality and financialization, we elaborate on the idea that such a prolonged period of stagnation is associated with a new paradigm of socio-economic policy, known as ‘finance-dominated capitalism’.In this way, we distance ourselves from the mainstream ‘secular stagnation’ narrative, adopting instead a post-Keynesian perspective that allows us to discuss the links between financialization and inequality, on one hand, and economic performance, on the other. Then, we submit our arguments to empirical scrutiny by undertaking an econometric analysis of 21 OECD countries between 1990 and 2016. The evidence indicates that excessive levels of financialization, along with high inequality and weak labor market institutions, have a negative impact on real growth.Based on our findings, we propose possible demand-side policies, to be implemented through expansionary fiscal measures, which could help sustain GDP growth and employment in the current context of stagnation, mitigating income inequality and sustaining an inclusive recovery at the same time.
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)
Downloads: (external link)
http://hdl.handle.net/10.1080/09538259.2020.1769282 (text/html)
Access to full text is restricted to subscribers.
Related works:
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:taf:revpoe:v:32:y:2020:i:2:p:216-242
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CRPE20
DOI: 10.1080/09538259.2020.1769282
Access Statistics for this article
Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon
More articles in Review of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().