Semi-autonomous household expenditures as the causa causans of postwar US business cycles: the stability and instability of Luxemburg-type external markets

Similar patterns can be observed in post-WWII US business cycles. The initial upswings tend to be led by household investment and debt-financed personal consumption expenditures, which then wane in relative importance, and lead downswings. As those expenditures are financed in significant part by money creation, they function as an external market-driving accumulation by enabling monetary profit realisation-in a way analogous to Rosa Luxemburg's treatment of the public and foreign sectors. Empirical studies on wage-led/profit-led demand regimes typically exclude household investment or include it in with business investment. This paper argues that it is vital to distinguish an independent role for 'semi-autonomous' household expenditures as a driver of effective demand and cyclical dynamics. The failure to do so in empirical studies sustains misleading conclusions such as the perceived relevance of Goodwin-type profit squeeze cycles.