Does income inequality affect aggregate consumption? Revisiting the evidence

Jesus Crespo Cuaresma, Jozef Kubala, Kristina Petrikova

Publication: Working/Discussion PaperWU Working Paper

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Abstract

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 substantive empirical evidence of an effect of income inequality on aggregate consumption. (authors' abstract)
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 2016

Publication series

NameDepartment of Economics Working Paper Series
No.210

WU Working Paper Series

  • Department of Economics Working Paper Series

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