Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250410 
Year of Publication: 
2022
Series/Report no.: 
ICAE Working Paper Series No. 135
Publisher: 
Johannes Kepler University Linz, Institute for Comprehensive Analysis of the Economy (ICAE), Linz
Abstract: 
We use an agent-based stock-flow consistent model of a closed economy without technological change that considers different classes of households, status consumption and a Minskyan banking sector to analyze the relationship between rising saving rates, the accumulation and distribution of private financial wealth and the evolution of public debt. Conducting a series of experiments, we find evidence for Keynes' famous claim that a rise in the propensity to save will not necessarily be matched by a rise in the propensity to invest, culminating in either chronic government deficits or consistently high unemployment rates if the government refuses to accept those deficits. The result emerges endogenously from the interaction of fully decentralized agents. The model indicates that promoting consumer credit can at best provide a very short-lived relief to this problem.
Subjects: 
propensity to save
wealth accumulation
public debt
unequal distribution of income and wealth
consumer credit
household bankruptcy agent-based stock-flow consistent modeling
Document Type: 
Working Paper

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