IDEAS home Printed from https://ideas.repec.org/a/kap/atlecj/v47y2019i3d10.1007_s11293-019-09630-9.html
   My bibliography  Save this article

Is the Relationship of Wealth Inequality with the Real, Financial and Housing Cycle Country-Specific?

Author

Listed:
  • Connor Bryant

    (Economic & Social Development, EKOS)

  • Bernd Süssmuth

    (University of Leipzig, Institute for Empirical Research in Economics
    CESifo)

Abstract

Relying on the methodology of deviation cycle dynamics, we analyze whether the association of wealth inequality measures and the real, financial and housing cycle are nationally idiosyncratic. Making use of recently available long time series for France, the United Kingdom (U.K.) and the United States (U.S.), we establish evidence in support of stock market returns co-moving with wealth concentration. However, this holds only for time series of the two studied Anglo-Saxon economies. The top one percent wealth share dynamics evolve procyclically across the housing, real and financial cycle dimension for the U.S. only. Cyclical growth of the French national product coincides with a falling wealth share of top and bottom percentiles and an increasing share of the middle class. No corresponding relationship was found for the U.S. and the U.K. Vector autoregressions (VAR) with single-shock identification confirm our frequency domain results. In the VAR(X) estimates, controlling for the subprime mortgage crisis statistically matters for the wealth concentration response to shocks in housing and stock prices and gross domestic product for the U.S. A control for the European sovereign debt crisis in the case of France is statistically insignificant.

Suggested Citation

  • Connor Bryant & Bernd Süssmuth, 2019. "Is the Relationship of Wealth Inequality with the Real, Financial and Housing Cycle Country-Specific?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(3), pages 323-341, September.
  • Handle: RePEc:kap:atlecj:v:47:y:2019:i:3:d:10.1007_s11293-019-09630-9
    DOI: 10.1007/s11293-019-09630-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11293-019-09630-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s11293-019-09630-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Katharina Knoll & Moritz Schularick & Thomas Steger, 2017. "No Price Like Home: Global House Prices, 1870-2012," American Economic Review, American Economic Association, vol. 107(2), pages 331-353, February.
    2. Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2017. "Global Inequality Dynamics: New Findings from WID.world," American Economic Review, American Economic Association, vol. 107(5), pages 404-409, May.
    3. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
    4. Lawrence J. Christiano & Terry J. Fitzgerald, 2003. "The Band Pass Filter," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 435-465, May.
    5. Moritz Kuhn & Moritz Schularick & Ulrike I. Steins, 2020. "Income and Wealth Inequality in America, 1949–2016," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3469-3519.
    6. Thomas Piketty & Gabriel Zucman, 2014. "Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1255-1310.
    7. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
    8. Andreas Fagereng & Luigi Guiso & Davide Malacrino & Luigi Pistaferri, 2020. "Heterogeneity and Persistence in Returns to Wealth," Econometrica, Econometric Society, vol. 88(1), pages 115-170, January.
    9. Christiano, Lawrence J. & Eichenbaum, Martin & Evans, Charles L., 1999. "Monetary policy shocks: What have we learned and to what end?," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 2, pages 65-148, Elsevier.
    10. Cagetti, Marco & De Nardi, Mariacristina, 2008. "Wealth Inequality: Data And Models," Macroeconomic Dynamics, Cambridge University Press, vol. 12(S2), pages 285-313, September.
    11. Branko Milanovic, 2014. "The Return of "Patrimonial Capitalism": A Review of Thomas Piketty's Capital in the Twenty-First Century," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 519-534, June.
    12. Komlos John, 2019. "Reaganomics: A Watershed Moment on the Road to Trumpism," The Economists' Voice, De Gruyter, vol. 16(1), pages 1-21, December.
    13. Ms. Deniz O Igan & Mr. Prakash Loungani, 2012. "Global Housing Cycles," IMF Working Papers 2012/217, International Monetary Fund.
    14. Michael Artis & Massimiliano Marcellino & Tommaso Proietti, 2004. "Dating Business Cycles: A Methodological Contribution with an Application to the Euro Area," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(4), pages 537-565, September.
    15. Branko Milanovic, 2014. "The Return of "Patrimonial Capitalism": A Review of Thomas Piketty's Capital in the Twenty-First Century," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 519-534, June.
    16. Schüler, Yves S. & Peltonen, Tuomas A. & Hiebert, Paul, 2017. "Coherent financial cycles for G-7 countries: Why extending credit can be an asset," ESRB Working Paper Series 43, European Systemic Risk Board.
    17. Ben S. Bernanke & Jean Boivin & Piotr Eliasz, 2005. "Measuring the Effects of Monetary Policy: A Factor-Augmented Vector Autoregressive (FAVAR) Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(1), pages 387-422.
    18. Milanovic, Branko, 2013. "The return of “patrimonial capitalism”: review of Thomas Piketty’s Capital in the 21st century," MPRA Paper 52384, University Library of Munich, Germany.
    19. repec:hal:pseose:halshs-01109372 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Süssmuth, Bernd & Wieschemeyer, Matthias, 2022. "Taxation and the distributional impact of inflation: The U.S. post-war experience," Economic Modelling, Elsevier, vol. 111(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Waldenström, 2021. "Wealth and History: An Update," CESifo Working Paper Series 9366, CESifo.
    2. Waldenström, Daniel, 2021. "Wealth and History: An Update," Working Paper Series 1411, Research Institute of Industrial Economics.
    3. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    4. Krapf, Matthias, 2018. "The Joint Distribution of Wealth and Income Risk: Evidence from Bern," Working papers 2018/18, Faculty of Business and Economics - University of Basel.
    5. Berger, Tino & Richter, Julia & Wong, Benjamin, 2022. "A unified approach for jointly estimating the business and financial cycle, and the role of financial factors," Journal of Economic Dynamics and Control, Elsevier, vol. 136(C).
    6. Stefan Ederer & Maximilian Mayerhofer & Miriam Rehm, 2021. "Rich and ever richer? Differential returns across socioeconomic groups," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 44(2), pages 283-301, April.
    7. Matthias Krapf, 2023. "Does Income Risk Affect the Wealth Distribution?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 49(4), pages 475-515, October.
    8. Berger, Tino & Richter, Julia & Wong, Benjamin, 2022. "A unified approach for jointly estimating the business and financial cycle, and the role of financial factors," Journal of Economic Dynamics and Control, Elsevier, vol. 136(C).
    9. Òscar Jordà & Katharina Knoll & Dmitry Kuvshinov & Moritz Schularick & Alan M Taylor, 2019. "The Rate of Return on Everything, 1870–2015," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1225-1298.
    10. Gil-Hernández, Carlos J. & Salas Rojo, Pedro & Vidal-Lorda, Guillem & Villani, Davide, 2024. "Wealth inequality and stratification by social classes in 21st-century Europe," LSE Research Online Documents on Economics 122125, London School of Economics and Political Science, LSE Library.
    11. Dmitry Kuvshinov & Kaspar Zimmermann, 2018. "The Big Bang: Stock Market Capitalization in the Long Run," Working Papers 0136, European Historical Economics Society (EHES).
    12. Galvin, Ray & Sunikka-Blank, Minna, 2018. "Economic Inequality and Household Energy Consumption in High-income Countries: A Challenge for Social Science Based Energy Research," Ecological Economics, Elsevier, vol. 153(C), pages 78-88.
    13. Roberto Brunetti & Carl Gaigné & Fabien Moizeau, 2023. "Land, Wealth, and Taxation," Economics Working Paper Archive (University of Rennes & University of Caen) 2023-06, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    14. Yasunori Fujita, 2015. "Missing equation in Piketty’s r-g theory," Economics and Business Letters, Oviedo University Press, vol. 4(2), pages 57-62.
    15. Joan R. Rovira, 2015. "Piketty on Growth and Distribution," Hacienda Pública Española / Review of Public Economics, IEF, vol. 214(3), pages 91-114, September.
    16. Grossmann, Volker & Larin, Benjamin & Löfflad, Hans Torben & Steger, Thomas, 2021. "Distributional consequences of surging housing rents," Journal of Economic Theory, Elsevier, vol. 196(C).
    17. Per Krusell & Anthony Smith & Joachim Hubmer, 2015. "The historical evolution of the wealth distribution: A quantitative-theoretic investigation," 2015 Meeting Papers 1406, Society for Economic Dynamics.
    18. Moritz Kuhn & Moritz Schularick & Ulrike I. Steins, 2020. "Income and Wealth Inequality in America, 1949–2016," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3469-3519.
    19. Yannic Rehm & Lucas Chancel, 2022. "Measuring the Carbon Content of Wealth Evidence from France and Germany," PSE Working Papers halshs-03828939, HAL.
    20. Bonnet, Odran & Chapelle, Guillaume & Trannoy, Alain & Wasmer, Etienne, 2021. "Land is back, it should be taxed, it can be taxed," European Economic Review, Elsevier, vol. 134(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:47:y:2019:i:3:d:10.1007_s11293-019-09630-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.