Macroeconomic determinants of wealth inequality dynamics

Edmond Berisha, John Meszaros

Research output: Contribution to journalArticle

Abstract

The evolution of wealth inequality over the long run depends on income growth, inflation, and interest rates. In this paper, we examine, in a dynamic setting, the effect of these three macroeconomic variables on wealth inequality in the United States over the periods 1929–2009 and 1962–2009. The results show that these macroeconomic factors explain a significant amount of the changes in wealth inequality. The results indicate that increases in inflation and income growth contribute positively to net wealth shares of adults in the bottom 50% and middle 40% of the wealth distribution, leading to decreases in overall wealth inequality. Interestingly, the results show increases in interest rates contribute to lower wealth inequality in the U.S. although this result does not hold across all the inequality measures.

Original languageEnglish
JournalEconomic Modelling
DOIs
StateAccepted/In press - 1 Jan 2019

Fingerprint

Macroeconomics
Wealth inequality
Interest rates
Income growth
Inflation
Wealth distribution
Wealth
Inequality measures
Inflation rate
Macroeconomic factors
Macroeconomic variables

Keywords

  • Household debt
  • Income growth
  • Inflation
  • Interest rates
  • Monetary policy
  • Wealth inequality

Cite this

@article{f7be54d7a1394bc5b8b17c6fcc32d447,
title = "Macroeconomic determinants of wealth inequality dynamics",
abstract = "The evolution of wealth inequality over the long run depends on income growth, inflation, and interest rates. In this paper, we examine, in a dynamic setting, the effect of these three macroeconomic variables on wealth inequality in the United States over the periods 1929–2009 and 1962–2009. The results show that these macroeconomic factors explain a significant amount of the changes in wealth inequality. The results indicate that increases in inflation and income growth contribute positively to net wealth shares of adults in the bottom 50{\%} and middle 40{\%} of the wealth distribution, leading to decreases in overall wealth inequality. Interestingly, the results show increases in interest rates contribute to lower wealth inequality in the U.S. although this result does not hold across all the inequality measures.",
keywords = "Household debt, Income growth, Inflation, Interest rates, Monetary policy, Wealth inequality",
author = "Edmond Berisha and John Meszaros",
year = "2019",
month = "1",
day = "1",
doi = "10.1016/j.econmod.2019.10.001",
language = "English",
journal = "Economic Modelling",
issn = "0264-9993",
publisher = "Elsevier",

}

Macroeconomic determinants of wealth inequality dynamics. / Berisha, Edmond; Meszaros, John.

In: Economic Modelling, 01.01.2019.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Macroeconomic determinants of wealth inequality dynamics

AU - Berisha, Edmond

AU - Meszaros, John

PY - 2019/1/1

Y1 - 2019/1/1

N2 - The evolution of wealth inequality over the long run depends on income growth, inflation, and interest rates. In this paper, we examine, in a dynamic setting, the effect of these three macroeconomic variables on wealth inequality in the United States over the periods 1929–2009 and 1962–2009. The results show that these macroeconomic factors explain a significant amount of the changes in wealth inequality. The results indicate that increases in inflation and income growth contribute positively to net wealth shares of adults in the bottom 50% and middle 40% of the wealth distribution, leading to decreases in overall wealth inequality. Interestingly, the results show increases in interest rates contribute to lower wealth inequality in the U.S. although this result does not hold across all the inequality measures.

AB - The evolution of wealth inequality over the long run depends on income growth, inflation, and interest rates. In this paper, we examine, in a dynamic setting, the effect of these three macroeconomic variables on wealth inequality in the United States over the periods 1929–2009 and 1962–2009. The results show that these macroeconomic factors explain a significant amount of the changes in wealth inequality. The results indicate that increases in inflation and income growth contribute positively to net wealth shares of adults in the bottom 50% and middle 40% of the wealth distribution, leading to decreases in overall wealth inequality. Interestingly, the results show increases in interest rates contribute to lower wealth inequality in the U.S. although this result does not hold across all the inequality measures.

KW - Household debt

KW - Income growth

KW - Inflation

KW - Interest rates

KW - Monetary policy

KW - Wealth inequality

UR - http://www.scopus.com/inward/record.url?scp=85073719580&partnerID=8YFLogxK

U2 - 10.1016/j.econmod.2019.10.001

DO - 10.1016/j.econmod.2019.10.001

M3 - Article

AN - SCOPUS:85073719580

JO - Economic Modelling

JF - Economic Modelling

SN - 0264-9993

ER -