Inequality, the Financial Crisis and Stagnation: Competing Stories and Why They Matter

No 151-2015, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper examines several mainstream explanations of the financial crisis and stagnation and the role they attribute to income inequality. Those explanations are contrasted with a structural Keynesian explanation. The role of income inequality differs substantially, giving rise to different policy recommendations. That highlights the critical importance of economic theory. Theory shapes the way we understand the world, thereby shaping how we respond to it. The theoretical narrative we adopt therefore implicitly shapes policy. That observation applies forcefully to the issue of income inequality, the financial crisis and stagnation, making it critical we get the story right.

Keywords: Income inequality; financial crisis; stagnation; economic theory. (search for similar items in EconPapers)
JEL-codes: E00 E02 E10 E20 E24 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2015
New Economics Papers: this item is included in nep-hpe, nep-mac and nep-pke
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:imk:wpaper:151-2015

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