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

Keywords

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

Fingerprint Dive into the research topics of 'Macroeconomic determinants of wealth inequality dynamics'. Together they form a unique fingerprint.

  • Cite this