Arjun Jayadev: Inequality and Macroeconomics Dynamics 2/5

The video discusses a paper on distribution and household debt, co-authored by Josh Mason. It highlights the significance of debt in macroeconomic discussions, focusing on private and household debt trends. The paper explores the functional distribution of income, emphasizing changes since the 1980s that increased returns to financial capital. It introduces Fisher Dynamics, explaining its role in leverage changes. The empirical analysis reveals that Fisher Dynamics significantly impacted leverage from 1980 to 2000. The conclusion suggests that understanding leverage requires considering distributional tensions and Fisher Dynamics, advocating for debt forgiveness.

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