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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 (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 / Department / Research Group: Faculty of Business
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Last Modified: 26 Sep 2019 15:18
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
URI: http://gala.gre.ac.uk/id/eprint/25269

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