The Inequality Multiplier

28 Pages Posted: 19 Apr 2016

See all articles by Mauro Gallegati

Mauro Gallegati

Università Politecnica delle Marche - Faculty of Economics

Simone Landini

IRES Piemonte, Socio-Economic Research Institute of Piedmont

Joseph E. Stiglitz

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: April 18, 2016

Abstract

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

Gallegati, Mauro and Landini, Simone and Stiglitz, Joseph E., The Inequality Multiplier (April 18, 2016). Columbia Business School Research Paper No. 16-29. Available at SSRN: https://ssrn.com/abstract=2766301 or http://dx.doi.org/10.2139/ssrn.2766301

Mauro Gallegati

Università Politecnica delle Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy
++390712207188 (Phone)
++390712207102 (Fax)

Simone Landini (Contact Author)

IRES Piemonte, Socio-Economic Research Institute of Piedmont ( email )

Via Nizza 18
Turin, Turin 10125
Italy
+390116666404 (Phone)
+390116666469 (Fax)

Joseph E. Stiglitz

Columbia Business School - Finance and Economics ( email )

3022 Broadway
814 Uris Hall
New York, NY 10027
United States
(212) 854-0671 (Phone)
(212) 662-8474 (Fax)

HOME PAGE: http://www.josephstiglitz.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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