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Income distribution and current account imbalances
- Publication Year :
- 2018
-
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.
- Subjects :
- Net national income
Economics and Econometrics
Labour economics
Total personal income
05 social sciences
Gross income
jel:D33
jel:E21
jel:F32
jel:D31
jel:F41
Adjusted gross income
jel:E25
0506 political science
Income distribution
Permanent income hypothesis
0502 economics and business
050602 political science & public administration
Economics
Soziologie, Sozialwissenschaften
Household income
050207 economics
Income elasticity of demand
income distribution, relatve income hypothesis, household debt, stock flow consistency, current account, institutions
Subjects
Details
- Language :
- English
- Database :
- OpenAIRE
- Accession number :
- edsair.doi.dedup.....987663dba411bb2aa420d47b239d7b17