EconPapers    
Economics at your fingertips  
 

Growing differently? Financial cycles, austerity, and competitiveness in growth models since the Global Financial Crisis

Karsten Kohler () and Engelbert Stockhammer ()

No PKWP2008, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: The paper contributes to the recent growth models debate through a cross-country analysis of growth drivers before and after the 2008 Global Financial Crisis (GFC). It argues that the widely used dichotomy of export-led versus (debt-financed) consumption-led growth has lost its usefulness since the GFC. The common method to identify those growth models through growth contributions can give misleading results after the GFC that led to sustained changes in the drivers of economic growth. The paper contends that Comparative Political Economy (CPE) neglects the unstable nature of financial growth drivers, effectively ignores fiscal policy, and overemphasises price competitiveness as a growth driver. It shows empirically that, first, debt-financed growth is cyclical and financial booms come with busts and debt overhang; second, post-GFC growth dynamics are strongly shaped by the fiscal policy reaction; third, price competitiveness through wage deflation has played a negligible role in driving growth. We conclude that CPE needs to broaden its analysis of growth drivers in order to understand how the GFC transformed growth models.

Keywords: growth models; austerity; financial cycles; comparative political economy; post-Keynesian macroeconomics (search for similar items in EconPapers)
JEL-codes: B50 O47 O57 (search for similar items in EconPapers)
Pages: 48
Date: 2020-03
New Economics Papers: this item is included in nep-eec, nep-hme, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.postkeynesian.net/downloads/working-pap ... wing_differently.pdf First version, 2020 (application/pdf)

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:pke:wpaper:pkwp2008

Access Statistics for this paper

More papers in Working Papers from Post Keynesian Economics Society (PKES) Contact information at EDIRC.
Bibliographic data for series maintained by Jo Michell ().

 
Page updated 2021-09-13
Handle: RePEc:pke:wpaper:pkwp2008