# Research

**Income/Wealth Inequality:**

*Income Inequality and household debt: a cointegration test* (with Ed Berisha and Eric Olson) *Applied Economics Letters *22.18 (2015): 1-5.

This article employs the Johansen and Engle–Granger methodology to determine if there is a cointegrating relationship between household debt and income inequality as measured by Atkinson, Piketty and Saez (2011). The results suggest a cointegrating relationship between the two series. A vector error correction model is estimated showing that a shock to household debt has statistically significant effects on income inequality in the United States over the time period 1919–2009.

*Household, Debt Economic Conditions, and Income Inequality: A State Level Analysis* (with Ed Berisha) *The Social Science Journal *54.1 (2017)*: *93-101.

This paper uses OLS regressions to understand the relationship between household debt, income inequality, and economic growth in the United States. For robustness we use two different measures of income inequality. The results show that, for the period 2003 to 2012, there is statistical evidence that increases in household debt are associated with lower levels of economic growth and higher rates of unemployment. In addition, we uncover evidence that high growth rates in household debt are associated with negative growth in income inequality, likely because debt caused economic growth to slow, diminishing the returns of top earners.

*Income Inequality, Equities, Debt, and Interest Rates: Evidence from a Century of Data* **(**with Ed Berisha and Eric Olson**)** *Journal of International Money and Finance *80 (2018): 1-14.

Using Philippon’s (2014) recently published historical household debt data, this paper uses Diebold and Yilmaz’s (2012) generalized variance decompositions and generalized impulse responses to understand the relationship between interest rates, the stock market, household debt, and the distribution of income in the U.S. For robustness we also implement Forni and Gambetti’s (2014) informational sufficiency tests in our VARs. The results indicate that increases in the stock market and household debt increase income inequality. Moreover, the relationship between the interest rate and income inequality is found to be negative and statistically significant.

*Inequality and Unionization within the United States** Quarterly Review of Economics and Finance *67 (2018): 326-333.

Using data on U.S. state-level inequality from Frank et al. (2015) and state-level unionization data from Hirsch et al. (2001), this paper shows that unions have a negative impact on income inequality in U.S. states. In particular, higher rates of unionization decreased inequality, as measured by the Gini coefficient, the share of income accruing to the top 1% of earners, and the share of income accruing to the top 10% of earners. The findings are robust across several estimation methods and also when union coverage is used as an alternative to the percent of workers in unions.

*Household debt, expected economic conditions, and income inequality** *(with Ed Berisha)* International Journal of Finance & Economics *23.3 (2018): 283-295.

The high level of debt among households outside the top end of the income distribution has led many economists to assert that household debt has been an important component of the increase in income inequality in the United States. In addition, the yield spread provides information about the overall condition of the economy and may also be tied into the distribution of income. The paper's results show that increases in the yield spread and household debt correspond with increases in top income shares, resulting in increases in income inequality. However, as household debt and income inequality increase, the yield spread contracts, which suggests future economic contraction. Thus, rising inequality may signal future economic weakness.

*Household Debt, Consumption, and Income Inequality* (with Ed Berisha) *International Economic Journal *32.2 (2018): 161-176.

Using the Johansen and Engle–Granger cointegration tests, we show that there is one cointegrating relationship between household debt, consumption, and income inequality in the United States for the period from 1929 to 2009. Given this result, we use a Vector Error-Correction model to further understand the dynamics among the three variables. Results indicate that increases in income inequality and consumption directly contribute to increases in household debt. Interestingly, the results reveal some feedback from household debt to income inequality. We also show that debt-driven consumption should be viewed with caution as the results show that increases in household debt correspond with future declines in the rate of consumption.

*Quantitative Easing and Median Income: A State-level Analysis* (with Ed Berisha and Zaman Zamanian) *Applied Economics, forthcoming. *

Due to the Great Recession, the Federal Reserve engaged in unconventional monetary policy (QE) to fight the effects of the economic downturn. Literature asserts that QE did have impacts on economic growth and helped alleviate the effects of the recession. Recently, critics have asserted that the benefits of QE may not have been equally distributed across households. In this paper, we build a state-level dataset to investigate the dynamics of QE measures and median income across the U.S states. The findings indicate that, for the period 2008 to 2014, there is statistical evidence that increases in the Federal Reserve’s balance sheet correspond with higher nominal median income. However, once we adjust for inflation, the results become statistically insignificant and the impact of QE on median income becomes almost zero.

*Long-term Rates, Capital Shares, and Income Inequality* (with Ed Berisha) *Open Economies Review, forthcoming.*

Using Piketty and Zucman’s (Q J Econ 129(3):1255-1310, 2014) recently published capital share data, this paper uses structural VARs to understand the relationship between long-term interest rates, capital shares, and the distribution of income in the United States. The results indicate that increases in capital shares increase income inequality. Moreover, the relationship between the interest rate and capital shares is found to be negative and statistically significant. The results suggest that low long-term rates, through an equity and business investment channel, further increase the unequal distribution of income in the U.S. The results further illuminate the channels through which monetary policy can potentially affect the distribution of income.

*Macroeconomic Determinants of Wealth Inequality Dynamics* (with Ed Berisha) *Economic Modelling, forthcoming. *

The evolution of wealth inequality over the long run depends on income growth, inflation, and interest rates. In this paper, we examine, in a dynamic setting, the effect of these three macroeconomic variables on wealth inequality in the United States over the periods 1929–2009 and 1962–2009. The results show that these macroeconomic factors explain a significant amount of the changes in wealth inequality. The results indicate that increases in inflation and income growth contribute positively to net wealth shares of adults in the bottom 50% and middle 40% of the wealth distribution, leading to decreases in overall wealth inequality. Interestingly, the results show increases in interest rates contribute to lower wealth inequality in the U.S. although this result does not hold across all the inequality measures.

**Other Publications:**

*The Effects of U.S. Quantitative Easing on South Africa** *(with Eric Olson) *Review of Financial Economics, forthcoming.*

This paper investigates the impact of the Federal Reserve’s monetary policy on the economy of South Africa, particularly during the period of quantitative easing and thereafter from 2009 to 2018. A VAR model, including South Africa’s inflation, output, a stock market index, exchange rate, and South Africa’s policy rate is examined to determine the impact of the Federal Reserve’s actions. Our results show that the Federal Reserve’s quantitative easing programs had only slight overall effects on South Africa’s economy. However, the way monetary policy is measured appears to have important effects for studies of international monetary spillovers as the results differ depending on the type of monetary policy measure used.

*Falling Through the Cracks: The Decline of Mental Health Care and Firearm Violence** Journal of Mental Health *26.4 (2017): 359-365.