Income Concentration, Financial Liberalization, and Decoupling Between the United States and China

This inquiry explores connections between income distribution and economic growth in the United States and China, arguing that in the United States income concentration coupled with financial deregulation became a structural factor contributing to the 2007 financial crisis and to the low growth registered afterwards. In China, despite the recent income concentration, economic growth was supported by public investment decoupling Chinese economic performance from the low rates of economic growth exhibited by the United States. A comparative approach to selected Keynesian transmission mechanisms and their effects on income concentration, domestic demand, and economic growth are considered for the United States and China.