Financialization, risk-sharing and wealth inequality in a stock-flow consistent model
Wealth inequality has been a core field of research in economics in the post-Global Financial Crisis era since it is an important driver of economic/financial crises and inhibits long-term growth. Compelling evidence indicates that wealth inequality has been increasing over and above income inequality but traditional theories of inequality lack in explaining the causes of such an increase in wealth inequality. This study shows that interest-based debt contracts may be the underlying cause of wealth inequality. The study discusses that asset-based redistribution, which targets the re-distribution of wealth through re-designation of financial contracts, has pronounced advantages over and above income-based re-distribution policies. The study also underlines that risksharing mechanisms are the building blocks of asset -based re-distribution policies. Stock-flow consistent modeling approach (SFCA) allows measuring comparative benefits of implementing risk-sharing asset-based redistribution policies compared to the base scenario of debt-based financialized economy.
Wealth inequality , Risk sharing , Financialization , Stock-flow
Akin, T. (2017). Financialization, risk-sharing and wealth inequality in a stock-flow consistent model (Doctoral dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/3026