Does income inequality affect aggregate consumption? Revisiting the evidence

Crespo Cuaresma, Jesus ORCID: and Kubala, Jozef and Petrikova, Kristina (2018) Does income inequality affect aggregate consumption? Revisiting the evidence. Empirical Economics, 55 (2). pp. 905-912. ISSN 1435-8921

Available under License Creative Commons: Attribution 4.0 International (CC BY 4.0).

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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.

Item Type: Article
Additional Information: Open access funding provided by Vienna University of Economics and Business (WU).
Keywords: Inequality, Aggregate consumption, Average propensity to consume
Classification Codes: JEL E22, D31
Divisions: Departments > Volkswirtschaft > Makroökonomie
Forschungsinstitute > Human Capital and Development
Kompetenzzentren > Sustainability Transf. & Responsibility
Version of the Document: Published
Depositing User: Gertraud Novotny
Date Deposited: 06 Jul 2017 13:33
Last Modified: 18 Aug 2020 07:08
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