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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.

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File URL: http://purl.umn.edu/143486
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Article provided by Review of Applied Economics in its journal Review of Applied Economics.

Volume (Year): 1 (2005)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:ags:reapec:143486
Contact details of provider: Web page: http://www.lincoln.ac.nz/story11874.html

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  1. David S. Johnson & Stephanie Shipp, 1999. "note: Inequality and the business cycle: A consumption viewpoint," Empirical Economics, Springer, vol. 24(1), pages 173-180.
  2. 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.
  3. Phillips, Peter C B & Hansen, Bruce E, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Wiley Blackwell, vol. 57(1), pages 99-125, January.
  4. 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.
  5. 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, M.E. Sharpe, Inc., vol. 23(4), pages 617-638, July.
  6. 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 372-78, May.
  7. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
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