Inequality, the risk of secular stagnation and the increase in household deb

Ansgar Rannenberg

No 375, Working Paper Research from National Bank of Belgium

Abstract: I investigate the effect of rising income inequality on the natural rate of interest in an economy with “rich” households with preferences over wealth and “non-rich” households, a housing market and credit market frictions. Simulating the increase in interpersonal and functional income inequality over the 1981-2016 period replicates the downward trend in the natural rate of interest estimated by Laubach and Williams (2016), most of the increase in the debt-to-income ratio of the bottom 90 % of households and the upward trend in house prices observed during this period.

Keywords: Income; inequalitynatural; rate; of; interestsecular; stagnation (search for similar items in EconPapers)
JEL-codes: D14 E25 E43 E52 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2019-08
New Economics Papers: this item is included in nep-ban and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:201908-375

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