Household Debt and Income Inequality , 1963 – 2003

  title={Household Debt and Income Inequality , 1963 – 2003},
  author={Jos{\'e} Vı́ctor Rı́os Rull},
  • José Vı́ctor Rı́os Rull
  • Published 2008
I construct an economy with heterogeneous agents that mimics the timeseries behavior of the earnings distribution in the United States from 1963 to 2003. Agents face aggregate and idiosyncratic shocks and accumulate real and financial assets. I estimate the shocks that drive the model using data on income inequality, aggregate income, and measures of financial liberalization. I show how the model economy can replicate two empirical facts: the trend and cyclical behavior of household debt and… CONTINUE READING