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Conspicuous consumption, inequality and debt: The nature of consumption-driven profit-led regimes

Jakob Kapeller () and Bernhard Schütz

No 2012-13, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: This paper extends the theoretical concept of wage-led and profit-led demand regimes, first introduced by Amit Bhaduri and Steven Marglin in the early 1990s, by incorporating relative consumption concerns. Specifically, it integrates the Veblenian concept of conspicuous consumption into a typical Bhaduri-Marglin model by assuming that relative consumption concerns matter primarily within the working class. If in such a framework the profit share increases and the corresponding decrease in workers' income is distributed unevenly, efforts to "keep up with the Joneses" may increase consumption and, hence, lead to a consumption- driven profit-led regime. The model's empirical relevance is illustrated with respect to the pre-crisis developments as observed in the U.S.

JEL-codes: B52 D11 E12 E20 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-12
New Economics Papers: this item is included in nep-hme and nep-pke
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Journal Article: Conspicuous Consumption, Inequality and Debt: The Nature of Consumption-driven Profit-led Regimes (2015) Downloads
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