Inequality, Debt Servicing, and the Sustainability of Steady State Growth
WORKING PAPER
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We investigate the claim that the way in which debtor households service their debts matters for macroeconomic performance.
A standard Kaleckian growth model is modified to incorporate working households who borrow to finance consumption that is determined, in part, by the desire to emulate the consumption patterns of more affluent households. When compared to previous contributions to the literature, our results show that the way in which debtor households service their debt has both quantitative and qualitative effects on the economy’s macrodynamics.