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Exploring the link between household debt and income inequality: an asymmetric approach

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  • Apostolos Fasianos
  • Hamid Raza
  • Stephen Kinsella

Abstract

We investigate the relationship between household debt and income inequality in the USA, allowing for asymmetry, using data over the period 1913–2008. We find evidence of an asymmetric cointegration between household debt and inequality for different regimes. Our results indicate household debt only responds to positive changes in income inequality, while there is no evidence of falling inequality significantly affecting household debt. The presence of this asymmetry provides further empirical insights into the emerging literature on household debt and inequality.

Suggested Citation

  • Apostolos Fasianos & Hamid Raza & Stephen Kinsella, 2017. "Exploring the link between household debt and income inequality: an asymmetric approach," Applied Economics Letters, Taylor & Francis Journals, vol. 24(6), pages 404-409, March.
    • Handle: RePEc:taf:apeclt:v:24:y:2017:i:6:p:404-409
    DOI: 10.1080/13504851.2016.1197360
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    References listed on IDEAS

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    8. Markus Christen & Ruskin Morgan, 2005. "Keeping Up With the Joneses: Analyzing the Effect of Income Inequality on Consumer Borrowing," Quantitative Marketing and Economics (QME), Springer, vol. 3(2), pages 145-173, June.
    9. Mian, Atif & Sufi, Amir, 2015. "House of Debt," University of Chicago Press Economics Books, University of Chicago Press, number 9780226271651, April.
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    Cited by:

    1. Fierro, Luca Eduardo & Giri, Federico & Russo, Alberto, 2023. "Inequality-constrained monetary policy in a financialized economy," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 366-385.
    2. Mariya Hake & Philipp Poyntner, 2022. "Keeping Up With the Novaks? Income Distribution as a Determinant of Household Debt in CESEE," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(S1), pages 224-260, April.
    3. Mehmet Akif Destek & Bilge Koksel, 2019. "Income inequality and financial crises: evidence from the bootstrap rolling window," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-23, December.
    4. Hake, Mariya & Poyntner, Philipp, 2020. "Keeping up with the Novaks? Income distribution as a determinant of household debt in CESEE," BOFIT Discussion Papers 3/2020, Bank of Finland, Institute for Economies in Transition.
    5. repec:zbw:bofitp:2020_003 is not listed on IDEAS

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