Inequality and Crisis: Conspicuous Consumption as the Missing Link in the Portuguese Case

Abstract:

Portuguese household debt increased above GDP between 2000 and 2007. This article uses conspicuous consumption to explain credit demand dynamics. The author develops an institutionalist framework and consider how rapid high inequalities and increasing top income share favored conspicuous consumption and climbing household debt.

Keywords::

• consumption
• Eurozone crisis
• Portugal
• household debt

JEL Classification Codes::

• A12
• B25
• E21

Notes

¹ This figure is slightly above present-day Gini coefficients for Argentina or Angola.

² In 2000–05, the top decile threshold was under 30 thousand euros, while the top 0.1 percent average income was over 350 thousand euros.

³ The inter-generational wage premium is the increase in the offspring’s wage of having a father with tertiary education relative to an offspring whose father had upper-secondary education.

Additional information

Notes on contributors

Cristina Matos

Cristina Matos is an Assistant Professor at Escola de Economia e Gestão, Universidade do Minho, Portugal.