National and International Income Dispersion and Aggregate Expenditures

Tinbergen Institute Discussion Paper No. TI 04-093/2

26 Pages Posted: 26 Aug 2004

See all articles by Carmen Fillat Castejon

Carmen Fillat Castejon

University of Zaragoza

Joseph F. Francois

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR); Vienna Institute of International Economic Studies (WIIW); University of Adelaide - School of Economics

Date Written: August 2004

Abstract

We examine linkages between aggregate household income, distribution of that income, and aggregate cross-country expenditure patterns. We are able to decompose income effects into international income dispersion effects (from variations in average income) and national income dispersion (income distribution) effects. This yields insights for relevant aggregate household specifications in computational policy models emphasizing household distribution of income. This also yields a consumption-pattern based inequality index that summarizes the projection of inequality through expenditure patterns. Estimation of flexible demand systems with representative expenditures (which reflects income distribution within countries) yields a significant relationship between representative consumption and cross-country demand patterns.

Keywords: Income distribution, aggregate demand, demand system estimation, Engel curves

JEL Classification: D31, D12, D63, C68

Suggested Citation

Fillat Castejon, Carmen and Francois, Joseph F, National and International Income Dispersion and Aggregate Expenditures (August 2004). Tinbergen Institute Discussion Paper No. TI 04-093/2. Available at SSRN: https://ssrn.com/abstract=582042 or http://dx.doi.org/10.2139/ssrn.582042

Carmen Fillat Castejon (Contact Author)

University of Zaragoza ( email )

Gran Via 2
Zaragoza, 50005
Spain

Joseph F Francois

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Vienna Institute of International Economic Studies (WIIW) ( email )

Oppolzergasse 6
A-1010 Vienna
Austria

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 5540 (Phone)
+61 8 8223 1460 (Fax)

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