Authors
Alberto Russo, Luca Riccetti, Mauro Gallegati
Publication date
2016/3
Journal
Journal of Evolutionary Economics
Volume
26
Pages
25-47
Publisher
Springer Berlin Heidelberg
Description
We investigate the interplay between increasing inequality and consumer credit in a complex macroeconomic system with financially fragile heterogeneous households, firms and banks. Simulation results show that there are pros and cons of introducing consumer credit: on the one hand, for a certain time, it leads to lower unemployment through boosting aggregate demand; on the other hand, it accelerates the system tendency to the crisis. Since the increase of financial profits goes with a decline of households’ real wealth, a policy trade-off emerges.
Scholar articles
Increasing inequality, consumer credit and financial fragility in an agent based macroeconomic model
A Russo, L Riccetti, M Gallegati - Journal of Evolutionary Economics, 2016