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Inequality and aggregate demand in the IS-LM and IS-MP models

Inequality and aggregate demand in the IS-LM and IS-MP models

Calvert Jump, Robert ORCID: 0000-0002-2967-512X (2017) Inequality and aggregate demand in the IS-LM and IS-MP models. Bulletin of Economic Research, 70 (3). pp. 269-276. ISSN 0307-3378 (Print), 1467-8586 (Online) (doi:https://doi.org/10.1111/boer.12134)

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Abstract

This paper presents an extension to the textbook IS‐LM and IS‐MP models that allows the short run effects of an increase in household income inequality to be studied in a simple manner. The income distribution is assumed to be log‐normal, and the coefficient of variation of income is assumed to be exogenous. The latter is used as the measure of income inequality, and enters otherwise standard IS and LM curves in a straightforward manner. While the models are highly stylised, they can easily be extended to more complicated variants.

Item Type: Article
Uncontrolled Keywords: inequality, IS‐LM, IS‐MP, E10, D31, A20
Subjects: H Social Sciences > HB Economic Theory
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Last Modified: 21 Oct 2020 11:16
URI: http://gala.gre.ac.uk/id/eprint/25269

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