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The stimulative effect of redistribution

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  • Bart Hobijn
  • Alexander Nussbacher

Abstract

Policymakers often consider temporarily redistributing income from rich to poor households to stimulate the economy. This is based in part on the idea that poor households spend a larger share of their income than rich ones do. However, ample evidence suggests that the difference in spending between these groups is significantly smaller than commonly assumed. A second assumption is that redistribution through policy is more efficient than through capital markets. Whether this is true is important to consider when proposing this type of stimulus policy.

Suggested Citation

  • Bart Hobijn & Alexander Nussbacher, 2015. "The stimulative effect of redistribution," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00061
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    References listed on IDEAS

    as
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