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PRODID:https://www.diw.de/de/diw_01.c.806339.de/veranstaltungen.html
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UID:diw_01.c.525182.en
LOCATION:Gustav-Schmoller-Raum,DIW Berlin im Quartier 110,3.3.002A,Anton-Wilhelm-Amo-Straße 58,10117 Berlin
SUMMARY:Income inequality and macroeconomic instability
DESCRIPTION:12:00 - 13:15 // We investigate whether changes in income distribution can explain current account developments in a sample of 20 countries for the period 1972-2007. We analyze the relationship between the personal and the functional income distribution in our sample, before disentangling their effects on the household and corporate financial balances and the current account. We find that rising (top-end) personal inequality leads to a decrease of the private household financial balance and the current account, controlling for standard current account determinants. Moreover, an increase in corporate net lending or, alternatively, a fall in the wage share leads to an increase in the current account, ceteris paribus. While we remain agnostic as to the underlying theoretical explanations of our findings, they are consistent with consumption externalities on the one hand and with incomplete piercing of the corporate veil or the underconsumptionist view on the other hand. We show that changes in personal and functional income distribution have contributed considerably to the widening of current account balances, and hence to the instability of the international economic system, prior to the global financial crisis starting in 2007.
DTSTART;VALUE=DATE:20160525
DTEND;VALUE=DATE:20160525
DTSTAMP:20160107T230000Z
URL:https://www.diw.de/en/diw_01.c.525182.en/events/income_inequality_and_macroeconomic_instability.html
ORGANIZER;CN=Niels Aka:mailto:naka@diw.de
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