The Rich and the Great Recession

Author/Editor:

Bas B. Bakker ; Joshua Felman

Publication Date:

December 16, 2014

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Most papers explaining the macro causes of the U.S. Great Recession focus on the behavior of the middle class: how its saving rate declined in the pre-crisis years, then surged following the crisis. This paper argues that the saving rate of the rich followed a similar pattern, the result of wealth effects associated with a boom-bust in asset prices. Indeed, the swings in saving by the rich must actually have played the most important role in the consumption boom-bust, since since the top 10 percent account for almost half of income and two-thirds of wealth. In other words, the rich played a critical role in the Great Recession.

Series:

Working Paper No. 14/225

Subject:

English

Publication Date:

December 16, 2014

ISBN/ISSN:

9781498307376/1018-5941

Stock No:

WPIEA2014225

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

36

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