Does income inequality affect aggregate consumption? Revisiting the evidence

Jesus Crespo Cuaresma, Jozef Kubala and Kristina Petrikova
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Jozef Kubala: University of Economics in Bratislava
Kristina Petrikova: University of Economics in Bratislava

Empirical Economics, 2018, vol. 55, issue 2, No 22, 905-912

Abstract: 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 empirical evidence of a negative effect of income inequality on aggregate consumption.

Keywords: Inequality; Aggregate consumption; Average propensity to consume (search for similar items in EconPapers)
JEL-codes: D31 E22 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s00181-017-1302-x

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