The Inequality Multiplier
28 Pages Posted: 19 Apr 2016
Date Written: April 18, 2016
That of the multiplier is a largely debated issue. Several studies propose estimates for it. This paper answers the question of how inequality affects the value of the multiplier. The proposed formulation is analytically derived from the Lorenz curve of income by means of Zanardi asymmetry index. Since the relationship between inequality and multiplier is found to be negative, it can be argued that greater inequality has depressive effects on GDP.
Keywords: Income multiplier, Income distribution, Lorenz curve asymmetry, Inequality
JEL Classification: B41, C65, D31, D63
Suggested Citation: Suggested Citation