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Macroeconomic Determinants of the Income Shares of the Very Highest Income Groups


  • DiPietro, William R.
  • Anoruo, Emmanuel
  • Sawhney, Bansi


By nature, people are guided by self-interests. Although all income groups have a stake in economic matters, the highest income groups are likely to have a much greater say in affecting the macro economy. Identifying the interests of higher income groups with regard to the economy is, therefore, important. It suggests where the effective energies of these potent groups are likely to be channeled, and allows one to assess the extent to which their objectives are in tune with the agenda of the broader society. This study uses the Phillips-Hansen fully modified OLS procedure to investigate the interrelationship between four key macroeconomic variables and the seven topmost income shares. We find that the extent of trade, inflation rate, unemployment, and real interest rate are highly significant in explaining the shares of the highest income groups in the United States.

Suggested Citation

  • DiPietro, William R. & Anoruo, Emmanuel & Sawhney, Bansi, 2005. "Macroeconomic Determinants of the Income Shares of the Very Highest Income Groups," Review of Applied Economics, Review of Applied Economics, vol. 1(1).
  • Handle: RePEc:ags:reapec:143486

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    References listed on IDEAS

    1. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    2. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
    3. Jantti, Markus, 1994. "A More Efficient Estimate of the Effects of Macroeconomic Activity on the Distribution of Income," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 372-378, May.
    4. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    5. David S. Johnson & Stephanie Shipp, 1999. "note: Inequality and the business cycle: A consumption viewpoint," Empirical Economics, Springer, vol. 24(1), pages 173-180.
    6. George Argitis & Christos Pitelis, 2001. "Monetary Policy and the Distribution of Income: Evidence for the United States and the United Kingdom," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(4), pages 617-638, July.
    7. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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    Cited by:

    1. DiPietro, William R. & Anoruo, Emmanuel & Sawhney, Bansi, 2005. "The Determinants of the Very Highest Income Shares: The Case of France," Review of Applied Economics, Review of Applied Economics, vol. 1(2).

    More about this item


    Income Inequality; inflation rate; unemployment rate; Consumer/Household Economics; Labor and Human Capital; Public Economics; Research Methods/ Statistical Methods; A10;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General


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