Income Distribution and Current Account Imbalances
Christian Belabed (),
Thomas Theobald and
Till van Treeck
No 126-2013, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute
Abstract:
We develop a three-country, stock-flow consistent macroeconomic model to study the effects of changes in both personal and functional income distribution on national current account balances. Each country has a household sector and a non-household (corporate) sector. The household sector is divided into income deciles, and consumer demand is characterized by upward-looking status comparisons following the relative income hypothesis of consumption. The strength of consumption emulation depends on country-specific institutions. The model is calibrated for the United States, Germany and China. Simulations suggest that a substantial part of the increase in household debt and the decrease in the current account in the United States since the early 1980s can be explained by the interplay of rising (top-end) household income inequality and institutions. On the other hand, the weak domestic demand and increasing current account balances of Germany and China since the mid-1990s are strongly related to shifts in the functional income distribution at the expense of the household sector.
Keywords: income distribution; relatve income hypothesis; household debt; stock flow consistency; current account; institutions (search for similar items in EconPapers)
JEL-codes: D31 D33 E16 E21 E25 F32 F41 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2013
New Economics Papers: this item is included in nep-cmp, nep-mac and nep-opm
References: Add references at CitEc
Citations: View citations in EconPapers (61)
Downloads: (external link)
http://www.boeckler.de/pdf/imk_wp_126_2013.pdf (application/pdf)
Related works:
Journal Article: Income distribution and current account imbalances (2018) 
Working Paper: Income Distribution and Current Account Imbalances (2014) 
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:imk:wpaper:126-2013
Access Statistics for this paper
More papers in IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute Contact information at EDIRC.
Bibliographic data for series maintained by Sabine Nemitz ().