Was Piketty right? Empirics of CCC Model: Corporate Power, Consumption, Debt and Inequality
This paper provides an empirical investigation into the empirics of cumulative and circular causation (CCC) model. Relying on their corporate power, corporations have stimulated the rising consumerism, which has increased both private consumption and debt. On the other hand, increasing debt has enhanced the process of rising inequality due to the lack of funding to invest in education or create savings. Rising inequality has further increased the bargaining power of capital and closed the CCC model. This paper tests the proposed theoretical model on a sample of OECD countries in the period between 1990 and 2013. We show that the growing corporate power causes increased consumption, growing household and public debt, as well as higher inequality. The paper makes several original contributions to the existing literature. First, it is the first empirical investigation of the CCC relationship. Second, it extends the knowledge about the trends of rising corporate power and consumerism at macro level.
Key words: Corporate power, Consumption, Debt, Non-recursive, Cumulative circular causation, Inequality.
JEL: B52, E02, P10.