Income Distribution and Macroeconomics
This paper analyzes the role of income distribution in macroeconomic analysis. The study demonstrates that the long-run equilibrium depends on the initial distribution of income. In accordance with empirical evidence concerning the correlation between income distribution and output, an economy that is characterized by a relatively equal distribution of wealth is likely to be wealthier in the long run. The study may, therefore, provide an additional explanation for the persistent differences in per-capita output across countries. Furthermore, the paper may shed light on cross-countries differences macroeconomic adjustment to aggregate shocks.
|Date of creation:||01 Jul 1988|
|Date of revision:||01 Sep 1989|
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