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A Note on Income Inequality and Macro-economic Volatility

Amnon Levy

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: Income inequality may influence macro-economic variables by affecting the money multiplier and the trade-off between inflation and output. In an AD-AS model with imperfect foresight income inequality intensifies the volatility of output and inflation rate by increasing the likelihood of oscillations as well as their magnitude. Volatility is, however, moderated when income inequality prolongs the business cycles.

Keywords: Rational eating; cycles (search for similar items in EconPapers)
JEL-codes: D31 E32 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2000
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (2)

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