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Income Business Cycles

Author

Listed:
  • Geraldine Dany-Knedlik
  • Alexander Kriwoluzky
  • Sandra Pasch

Abstract

Using a wide variety of business cycle dating and filtering techniques, this paper documents the cyclical behavior of the post-tax income distribution in the US. First, all incomes are cyclical and co-move with the business cycle. Second, lower and higher income individuals experience significantly larger fluctuations across the business cycle than middle-income individuals. Third, these fluctuations have become smaller over the course of the Great Moderation for the bottom and the very top income individuals. With the financial crisis starting in 2009 and its repercussions, the volatilities are again increasing; however, not significantly. These findings are independent from the method to extract the business cycle component.

Suggested Citation

  • Geraldine Dany-Knedlik & Alexander Kriwoluzky & Sandra Pasch, 2021. "Income Business Cycles," Discussion Papers of DIW Berlin 1964, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1964
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.823140.de/dp1964.pdf
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    References listed on IDEAS

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    Cited by:

    1. Lenney, Jamie, 2022. "Monetary policy transmission, the labour share and HANK models," Bank of England working papers 960, Bank of England.

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    More about this item

    Keywords

    Cyclicity of the income distribution; business cycle;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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