Norway research links income inequality and banking crises

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A working paper published by Norges Bank comparing the financial crisis experienced in Norway in the early 1990s to the one seen in the US in 2008, concludes that growing income inequality contributed to the financial instability that led to the crisis.

Author Sverre Knutsen finds that in both countries, consumers found real wage rates declining and began to borrow more to maintain consumption.

The working paper highlights that the financial crises in both countries were preceded by a reduction

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