Atif Mian and Amir Sufi — Why the Income Distribution Matters for Macroeconomics

Obvious to everyone but conventional economists. (See Manfred's comment on March 27, 2014 at 11:01)

House of Debt
Why the Income Distribution Matters for Macroeconomics
Atif Mian and Amir Sufi

Steve Roth comments:

STEVE ROTH ON MARCH 27, 2014 AT 12:10 PMI

Thanks for these great links to the empirical literature. Got my reading cut out for me.

On the theory: the arithmetic of this is inexorable — roughed out in a simple model here:

http://www.asymptosis.com/does-upward-redistribution-cause-secular-stagnation.html

As the post says, this is only one economic effect being illustrated. But the potential power of this effect seems massive — especially over decades — and it seems to be almost universally ignored and even pooh-poohed by economists, even liberal economists.

http://www.asymptosis.com/a-liberal-is-someone-who-doesnt-know-how-to-take-his-own-side-in-an-argument.html

http://www.asymptosis.com/underconsumption-income-wealth-and-capital-gains.html