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Full-Text Articles in Economics
Long-Term Rates, Capital Shares, And Income Inequality, Edmond Berisha, John Meszaros
Long-Term Rates, Capital Shares, And Income Inequality, Edmond Berisha, John Meszaros
Department of Economics Faculty Scholarship and Creative Works
Using Piketty and Zucman’s (Q J Econ 129(3):1255-1310, 2014) recently published capital share data, this paper uses structural VARs to understand the relationship between long-term interest rates, capital shares, and the distribution of income in the United States. The results indicate that increases in capital shares increase income inequality. Moreover, the relationship between the interest rate and capital shares is found to be negative and statistically significant. The results suggest that low long-term rates, through an equity and business investment channel, further increase the unequal distribution of income in the U.S. The results further illuminate the channels through which monetary …
Household Debt, Expected Economic Conditions, And Income Inequality, Edmond Berisha, John Meszaros
Household Debt, Expected Economic Conditions, And Income Inequality, Edmond Berisha, John Meszaros
Department of Economics Faculty Scholarship and Creative Works
The high level of debt among households outside the top end of the income distribution has led many economists to assert that household debt has been an important component of the increase in income inequality in the United States. In addition, the yield spread provides information about the overall condition of the economy and may also be tied into the distribution of income. The paper's results show that increases in the yield spread and household debt correspond with increases in top income shares, resulting in increases in income inequality. However, as household debt and income inequality increase, the yield spread …
Household Debt, Consumption, And Income Inequality, Edmond Berisha, John Meszaros
Household Debt, Consumption, And Income Inequality, Edmond Berisha, John Meszaros
Department of Economics Faculty Scholarship and Creative Works
Using the Johansen and Engle–Granger cointegration tests, we show that there is one cointegrating relationship between household debt, consumption, and income inequality in the United States for the period from 1929 to 2009. Given this result, we use a Vector Error-Correction model to further understand the dynamics among the three variables. Results indicate that increases in income inequality and consumption directly contribute to increases in household debt. Interestingly, the results reveal some feedback from household debt to income inequality. We also show that debt-driven consumption should be viewed with caution as the results show that increases in household debt correspond …
Income Inequality, Equities, Household Debt, And Interest Rates: Evidence From A Century Of Data, Edmond Berisha, John Meszaros, Eric Olson
Income Inequality, Equities, Household Debt, And Interest Rates: Evidence From A Century Of Data, Edmond Berisha, John Meszaros, Eric Olson
Department of Economics Faculty Scholarship and Creative Works
Using Philippon's (2015) recently published historical household debt data, this paper uses Diebold and Yilmaz's (2012) generalized variance decompositions and generalized impulse responses to understand the relationship between interest rates, the stock market, household debt, and the distribution of income in the U.S. The results indicate that increases in the stock market and household debt increase income inequality. Moreover, the relationship between the interest rate and income inequality is found to be negative and statistically significant. We interpret our results as suggesting that high income earners derive a larger portion of their income from interest rate sensitive assets.
Yield Spread And The Income Distribution, Edmond Berisha
Yield Spread And The Income Distribution, Edmond Berisha
Department of Economics Faculty Scholarship and Creative Works
The yield spread is known to be closely related with business cycles identified by the National Bureau of Economic Research. It is low near peaks and high near troughs. This paper builds on this known relationship and examines the response of the income distribution in the U.S. due to variation in the yield spread. The purpose is to identify the significance and sign of the impact changes in economic conditions have on the distribution of income over the period 1927–2011. Clark and McCracken's (2001) 1-step ahead encompassing tests from nested linear models are initially estimated to determine the predictive power …
Income Inequality And Household Debt: A Cointegration Test, Edmond Berisha, John Meszaros, Eric Olson
Income Inequality And Household Debt: A Cointegration Test, Edmond Berisha, John Meszaros, Eric Olson
Department of Economics Faculty Scholarship and Creative Works
This article employs the Johansen and Engle–Granger methodology to determine if there is a cointegrating relationship between household debt and income inequality as measured by Atkinson, Piketty and Saez (2011). The results suggest a cointegrating relationship between the two series. A vector error correction model is estimated showing that a shock to household debt has statistically significant effects on income inequality in the United States over the time period 1919–2009.