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- Title
Semi-autonomous household expenditures as the causa causans of postwar US business cycles: the stability and instability of Luxemburg-type external markets.
- Authors
Fiebiger, Brett
- Abstract
Similar patterns can be observed in post-WWII US business cycles. The initial upswings tend to be led by household investment and debt-financed personal consumption expenditures, which then wane in relative importance, and lead downswings. As those expenditures are financed in significant part by money creation, they function as an external market--driving accumulation by enabling monetary profit realisation--in a way analogous to Rosa Luxemburg's treatment of the public and foreign sectors. Empirical studies on wage-led/profit-led demand regimes typically exclude household investment or include it in with business investment. This paper argues that it is vital to distinguish an independent role for 'semi-autonomous' household expenditures as a driver of effective demand and cyclical dynamics. The failure to do so in empirical studies sustains misleading conclusions such as the perceived relevance of Goodwin-type profit squeeze cycles.
- Subjects
UNITED States; BUSINESS cycles; COST of living; PROFITABILITY; HOUSEHOLDS; MONETARY policy; UNITED States economy; TWENTY-first century
- Publication
Cambridge Journal of Economics, 2018, Vol 42, Issue 1, p155
- ISSN
0309-166X
- Publication type
Article
- DOI
10.1093/cje/bex019