Monthly Archives: June 2015

Thomas Palley On Competing Stories On Inequality, The Financial Crisis And Stagnation

Thomas Palley has a new paper Inequality, The Financial Crisis And Stagnation: Competing Stories And Why They Matter.


This paper examines several mainstream explanations of the financial crisis and stagnation and the role they attribute to income inequality. Those explanations are contrasted with a structural Keynesian explanation. The role of income inequality differs substantially, giving rise to different policy recommendations. That highlights the critical importance of economic theory. Theory shapes the way we understand the world, thereby shaping how we respond to it. The theoretical narrative we adopt therefore implicitly shapes policy. That observation applies forcefully to the issue of income inequality, the financial crisis and stagnation, making it critical we get the story right.

The paper can be found in Thomas Palley’s blog post here. (Direct link here)