Exploring the link between household debt and income inequality: an asymmetric approach

We investigate the relationship between household debt and income inequality in the USA, allowing for asymmetry, using data over the period 1913-2008. We find evidence of an asymmetric cointegration between household debt and inequality for different regimes. Our results indicate household debt only...

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Bibliographic Details
Published in:Applied economics letters 2017-03, Vol.24 (6), p.404-409
Main Authors: Fasianos, Apostolos, Raza, Hamid, Kinsella, Stephen
Format: Article
Language:English
Subjects:
Asymmetry
credit asymmetry
Debt
Debt service
Economic analysis
Household debt
Households
Income distribution
Income inequality
nonlinear ARDL
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Summary:We investigate the relationship between household debt and income inequality in the USA, allowing for asymmetry, using data over the period 1913-2008. We find evidence of an asymmetric cointegration between household debt and inequality for different regimes. Our results indicate household debt only responds to positive changes in income inequality, while there is no evidence of falling inequality significantly affecting household debt. The presence of this asymmetry provides further empirical insights into the emerging literature on household debt and inequality.
ISSN:1350-4851
1466-4291
DOI:10.1080/13504851.2016.1197360