Inequality, Savings, and Consumption: A Reassessment of the Relationships in Cointegrated Panels

Tuomas Malinen

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2013, vol. 59, issue 3, 235-251

Abstract: The effect of income inequality on savings and consumption remains an open empirical issue despite several decades of research. The results obtained in this study indicate that income inequality, gross savings, and private consumption are unit root processes, but only inequality and private consumption are cointegrated across the sample. Inequality and gross savings are found to be cointegrated only in some countries. In addition, inequality is found to have a negative impact on private consumption.

Keywords: panel cointegration; top 1% income share; private consumption; gross savings (search for similar items in EconPapers)
Date: 2013
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