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Do rising top incomes fuel credit expansion?

Abstract : This paper provides an empirical assessment of the effect of income inequality on credit dynamics in 12 advanced economies over the period 1948-2015. We use foreign Communist influence as an instrument to identify exogenous variation in inequality and estimate the dynamic effect of a top income shock on credit over GDP. The results suggest that the evolution of top incomes has persistent effects on credit expansion, especially for mortgage and business loans.
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Submitted on : Thursday, November 12, 2020 - 7:29:14 PM
Last modification on : Friday, November 13, 2020 - 3:29:45 AM




Mehdi El Herradi, Aurélien Leroy. Do rising top incomes fuel credit expansion?. Economics Letters, Elsevier, 2020, 196, pp.109539. ⟨10.1016/j.econlet.2020.109539⟩. ⟨hal-03002536⟩



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