Does income inequality affect aggregate consumption? Revisiting the evidence

Jesus Crespo Cuaresma, Jozef Kubala, Kristina Petrikova

Publication: Scientific journalJournal articlepeer-review

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The standard Keynesian view predicts that equalization of the income distribution leads to an increase in aggregate consumption. We revisit the analysis carried out by the seminal empirical contributions which test such a hypothesis using modern econometric methods and the most comprehensive dataset existing on income distribution measures. Our results indicate that there is no empirical evidence of a negative effect of income inequality on aggregate consumption.
Original languageEnglish
Pages (from-to)905 - 912
JournalEmpirical Economics
Issue number2
Publication statusPublished - 2018

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