Macroeconomic policy and income inequality: an error-correction representation

Fiscal policy ; Income distribution ; Monetary policy

A New Inequality Measure that is Sensitive to Extreme Values and Asymmetries

There is a vast literature on the selection of an appropriate index of income inequality and on what desirable properties such a measure (or index) should contain. The Gini index is, of course, the most popular. There is a concurrent literature on the use of hypothetical statistical distributions to approximate and describe an observed distribution of incomes. Pareto and others observed early on that incomes tend to be heavily right-tailed in their distribution. These asymmetries led to approximating the observed income distributions with extreme value hypothetical statistical distributions, such as the Pareto distribution. But these income distribution functions (IDFs) continue to be described with a single index (such as the Gini) that poorly detects the extreme values present in the underlying empirical IDF. This paper introduces a new inequality measure to supplement, but not to replace, the Gini that measures more accurately the inherent asymmetries and extreme values that are present in observed income distributions. The new measure is based on a third-order term of a Legendre polynomial from the logarithm of a share function (or Lorenz curve). We advocate using the two measures together to provide a better description of inequality inherent in empirical income distributions with extreme values

An exponential family of Lorenz curves

A new method for building parametric-functional families of Lorenz curves, generated from an initial Lorenz curve (which satisfies some regularity conditions), is presented. The method is applied to the exponential family since they use the exponential Lorenz curves as their generating curves. Several properties of these families are analyzed, including the population function, inequality measures, and Lorenz orderings. Finally, an application is presented for data from various countries. The family is shown to perform well in fitting the data across countries. The results are very robust across data sources

Change in the U.S. Income Distribution from 1970 to 1980: Assessing State and Regional Impacts

None available

Measuring the Quality of Life across Countries.

A multidimensional approach to measuring the quality of life across countries is introduced. The author operationalizes A. Sen's concept that other factors besides gross domestic product and mortality rates should be incorporated into any quality of life analysis. This paper examines twenty attributes for 126 countries in computing a new index. Copyright 1991 by MIT Press.