Inequality, Leverage and Crises

Inequality, Leverage and Crises
Author :
Publisher : International Monetary Fund
Total Pages : 40
Release :
ISBN-10 : 9781455211517
ISBN-13 : 1455211516
Rating : 4/5 (17 Downloads)

Book Synopsis Inequality, Leverage and Crises by : Romain Ranciere

Download or read book Inequality, Leverage and Crises written by Romain Ranciere and published by International Monetary Fund. This book was released on 2010-11-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper studies how high leverage and crises can arise as a result of changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of the rich, a large increase in leverage for the remainder, and an eventual financial and real crisis. The paper presents a theoretical model where these features arise endogenously as a result of a shift in bargaining powers over incomes. A financial crisis can reduce leverage if it is very large and not accompanied by a real contraction. But restoration of the lower income group''s bargaining power is more effective.


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