UM  > Faculty of Business Administration
Inequality, leverage and crises: Theory and evidence revisited
Xinhua Gu; Pui Sun Tam; Yang Zhang; Chun Kwok Lei
Source PublicationWorld Economy
ABS Journal Level2

Rajan points to rising income inequality as a root cause of the recent financial crisis through high household leverage. The Rajan hypothesis has ignited debate over the relationship between inequality, leverage and crises. Kumhof, Ranciere, and Winant prove the validity of this hypothesis with a theoretical formulation, but empirical studies provide mixed evidence using different samples and estimators. To clarify this controversy, we re‐examine the issue by using the same data as in the literature and provide additional evidence after taking into account the role of asset bubbles and policy interventions. Our regression is based on a new tractable theoretical model that is supported by key stylised facts, and all our analyses confirm the existence of the inequality–leverage–crisis nexus.

KeywordAsset Bubble Gmm Regression Inequality Leverage Theoretical Framework Financial Crisis
Indexed BySSCI ; SSCI
WOS Research AreaBusiness & Economics ; International Relations
WOS SubjectBusiness, Finance ; Economics ; International Relations
WOS IDWOS:000478866200001
Fulltext Access
Citation statistics
Cited Times [WOS]:1   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionFaculty of Business Administration
AffiliationDepartment of Finance and Business Economics, Faculty of Business Administration, University of Macau, Macau, China
First Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Xinhua Gu,Pui Sun Tam,Yang Zhang,et al. Inequality, leverage and crises: Theory and evidence revisited[J]. World Economy,2019,42(8):2280-2299.
APA Xinhua Gu,Pui Sun Tam,Yang Zhang,&Chun Kwok Lei.(2019).Inequality, leverage and crises: Theory and evidence revisited.World Economy,42(8),2280-2299.
MLA Xinhua Gu,et al."Inequality, leverage and crises: Theory and evidence revisited".World Economy 42.8(2019):2280-2299.
Files in This Item:
There are no files associated with this item.
Related Services
Recommend this item
Usage statistics
Export to Endnote
Google Scholar
Similar articles in Google Scholar
[Xinhua Gu]'s Articles
[Pui Sun Tam]'s Articles
[Yang Zhang]'s Articles
Baidu academic
Similar articles in Baidu academic
[Xinhua Gu]'s Articles
[Pui Sun Tam]'s Articles
[Yang Zhang]'s Articles
Bing Scholar
Similar articles in Bing Scholar
[Xinhua Gu]'s Articles
[Pui Sun Tam]'s Articles
[Yang Zhang]'s Articles
Terms of Use
No data!
Social Bookmark/Share
All comments (0)
No comment.

Items in the repository are protected by copyright, with all rights reserved, unless otherwise indicated.