Income Distribution, Cbkp_redit Rationing And Households' Debt

Abstract:

In this paper, we present a model of an economy with household debt, and discuss the conditions under which financial fragility arises. Financial instability is driven by distributive effects. In addition to the income transfers associated with interest payments, the accumulation of debt feeds back with the distribution of income between labour and capital. The model also gives a central role to banks and cbkp_redit rationing. Contrary to the existing literature, cbkp_redit supply does not depend on the characteristics of borrowers, but on those of banks. There is a feedback channel between the health of the financial system and the quantity of cbkp_redit in the economy. We show that there is a diversity of channels through which financial fragility may arise. We identify three channels: a debt-deflation effect à la Fisher, a cbkp_redit-financed consumption boom and an exhilarating debt effect. © 2012 Blackwell Publishing Ltd.

Año de publicación:

2012

Keywords:

Fuente:

scopus