TY - JOUR
T1 - Do We Eat Too Much?
T2 - The Current Economic Crisis as a Result of Overconsumption
AU - Jaworski, P.M.
AU - Weber, Jörg
PY - 2011/8
Y1 - 2011/8
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-80052836368&partnerID=MN8TOARS
U2 - 10.1177/0260107911023003-00402
DO - 10.1177/0260107911023003-00402
M3 - Article
SN - 2321-5305
VL - 23
SP - 223
EP - 238
JO - Journal of Interdisciplinary Economics
JF - Journal of Interdisciplinary Economics
IS - 3-4
ER -