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Private Debt and the Anglo-Liberal Growth Model

Barnes, L; (2016) Private Debt and the Anglo-Liberal Growth Model. Government and Opposition , 51 (4) pp. 529-552. 10.1017/gov.2015.17. Green open access

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Abstract

Was there really a debt-fuelled ‘liberal growth model’ that preceded the 2008 financial crisis? The accepted narrative about the pre-crisis boom is that some liberal countries relied on domestic consumption to fuel economic growth, and on household debt to fuel this consumption. In this, they contrasted with coordinated economies. While eventually unsustainable, the growth strategy was politically necessary to maintain middle-class living standards in the context of increasing income inequality. In this article, I take these contentions to the data. Economic evidence from 1995–2007 and political data from the Comparative Manifesto Project Database undermine this received wisdom: while household debt increased in the liberal countries, it does not differentiate this particular growth model. Further, there is no evidence that politicians in liberal countries advocate different economic policies, including those concerning borrowing, to claim credit and stay in power. Differences in the importance of finance between countries, however, suggest a more elite-driven divergence.

Type: Article
Title: Private Debt and the Anglo-Liberal Growth Model
Open access status: An open access version is available from UCL Discovery
DOI: 10.1017/gov.2015.17
Publisher version: http://dx.doi.org/10.1017/gov.2015.17
Language: English
Additional information: This article has been published in a revised form in Government and Opposition: http://dx.doi.org/10.1017/gov.2015.17. This version is free to view and download for private research and study only. Not for re-distribution, re-sale or use in derivative works. Copyright © The Author(s). Published by Government and Opposition Limited and Cambridge University Press 2015.
Keywords: debt; borrowing; financial crisis; varieties of capitalism; growth models
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Political Science
URI: https://discovery.ucl.ac.uk/id/eprint/1493027
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