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Estimating Distributional Responses to Macroeconomic Shocks

Author

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  • David Childers

    (Carnegie Mellon University)

  • Ross Doppelt

    (Penn State)

Abstract

A growing literature seeks to understand how inequality changes over the business cycle. Various measures of income dispersion appear to be countercyclical. Our goal is to study the cyclical dynamics of the earnings distribution, but we want to do more than summarize the distribution, conditional on the economy being in expansion or recession. For instance, one might think that dispersion looks different in an expansion caused by a technology shock, compared to an expansion caused by a monetary shock. Likewise, one might think that a given shock has different effects on different conditional distributions, such as the earnings distribution for college graduates and the earnings distribution for high school graduates. We will develop tools for measuring how the distribution responds to identified macroeconomic shocks. Our strategy will be to combine tools from structural time series with tools from non-parametric Bayesian statistics.

Suggested Citation

  • David Childers & Ross Doppelt, 2019. "Estimating Distributional Responses to Macroeconomic Shocks," 2019 Meeting Papers 1541, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:1541
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    References listed on IDEAS

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    1. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.
    2. Ramey, V.A., 2016. "Macroeconomic Shocks and Their Propagation," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 71-162, Elsevier.
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