Thomas Theobald studied mathematics and economics at Goethe University Frankfurt from 2004 to 2010. Before that he became a trained bank clerk at Landesbank Rheinland-Pfalz, and while studying he worked part time, especially in the audit and risk management department at Landesbank Baden-Wuerttemberg. In May 2010 he started his graduate studies within a program of the IMK at Hans Boeckler Foundation and at Free University (FU) Berlin. From November 2010 to April 2011 he participated in the research project ‘Business Cycle Turning Points’ on behalf of the German Ministry of Finance. Thomas’s research interests include financial market regulation, time series econometrics, and agent-based modeling.
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[PART 2] U.S. Current Account Deficits and German Surpluses: The Role of Income Distribution in Global Imbalances
In our two papers, we analyze how changes in personal and functional (wages versus profits) income distribution interact to produce different macroeconomic outcomes in different countries. On the basis of a stock-flow consistent model calibrated for the United States, Germany, and China, simulations suggest that a substantial part of the increase in household debt and the decrease in the current account in the United States since the early 1980s can be explained by the interplay of rising (top-end) household income inequality and certain institutions (e.g. easy access to credit, privately financed education and health care systems).
We develop a three-country, stock-flow consistent macroeconomic model to study the effects of changes in both personal and functional income distribution on national current account balances.
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Institute for New Economic Thinking grantees Christian Belabed and Thomas Theobald and their co-authors have revived this old theory as a hypothesis to explain the apparent statistical link between rising income inequality and current account deficits.