Inequality and Business Cycles
Florin Bilbiie,
Giorgio Primiceri and
Andrea Tambalotti
Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Abstract:
We quantify the connection between inequality and business cycles in a medium-scale New Keynesian model with tractable household heterogeneity, estimated with aggregate and cross-sectional data. We find that inequality substantially amplifies cyclical fluctuations. The primary source of this amplification is cyclical precautionary saving behavior. Savers reduce their consumption to insure themselves against the idiosyncratic risk of large income drops, which rises in recessions.
Date: 2022-12-16
Note: fob21
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe2275.pdf
Related works:
Working Paper: Inequality and Business Cycles (2023) 
Working Paper: Inequality and Business Cycles (2023) 
Working Paper: Inequality and Business Cycles (2022) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2275
Access Statistics for this paper
More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer (jd419@cam.ac.uk).