Do We Eat Too Much? The current economic crisis as a result of overconsumption.

Jaworski, Piotr Marek and Weber, Jorg (2011) Do We Eat Too Much? The current economic crisis as a result of overconsumption. Journal of Interdisciplinary Economics, 23. pp. 223-238. ISSN 0260-1079

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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 a possible in order to avoid another, probably more severe crisis in the long-run.

Item Type: Article
Print ISSN: 0260-1079
Uncontrolled Keywords: Overconsumption; economy; economic crisis; deficit; real wage inflation;
University Divisions/Research Centres: The Business School > School of Accounting, Financial Services and Law
Dewey Decimal Subjects: 300 Social sciences > 330 Economics > 337 International economics
Library of Congress Subjects: H Social Sciences > HC Economic History and Conditions
Item ID: 5330
Depositing User: Dr Piotr Jaworski
Date Deposited: 29 May 2012 15:31
Last Modified: 30 Mar 2013 06:35

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