PARADIGMATIC PERSPECTIVES ON INCOME DISTRIBUTION AND FINANCIAL CRISES

Abstract

The role of the income distribution and inequality among individuals and factors of production on the occurrence of financial crises has long been a controversial issue in economics literature and the stance of the economists on this debate is mainly rooted in their different views on the distributional mechanism in the economic system. By conducting an extensive literature review, this paper attempts to illustrate the views of the different schools of economic though on role of income distribution and inequality as a cause of the financial crises with a special focus on the subprime crisis in 2008.

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