Do We Eat Too Much? The Current Economic Crisis as a Result of Overconsumption

P.M. Jaworski (Lead / Corresponding author), Jörg Weber (Lead / Corresponding author)

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

Over the past 15 years, a fairly synchronised and steady increase of the current account deficits of the US and the UK has been witnessed, while at the same time real house prices and real wages in these two economies increased sharply. We analyse the offspring of the economic crisis of 2008 within the framework of Minsky's theory of financial crisis, and identify the reasons behind this development as the global imbalances. Our empirical results show that overconsumption in the US and UK caused unsustainable growth, which manifested first in real wage inflation. Within this development, neither the financial sector nor failed regulation is to blame, as financial intermediaries merely fulfilled their requirements as the vehicle between borrowers and lenders. Instead, we argue, our ‘need’ for overconsumption is to blame, and policy makers are required to address this issue as soon as possible in order to avoid another, probably more severe crisis in the long-run.
Original languageEnglish
Pages (from-to)223-238
Number of pages15
JournalJournal of Interdisciplinary Economics
Volume23
Issue number3-4
Early online date1 Aug 2011
DOIs
Publication statusPublished - Aug 2011

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