Scholarlink

<p>This paper contributes to the macroeconomic debate on the relationship between income inequality and aggregate consumption by focusing on Italy, one of the largest economies in Europe, which experienced a significant increase in inequality before the COVID-19 crisis. The analysis follows a two-step approach. First, building on previous macroeconomic studies, we extend the aggregate household consumption function by including measures of inequality, namely the Gini index, the P80/P20 ratio, and the P90/P10 ratio. Second, the extended consumption function is embedded in the macroeconometric model of the Italian economy (MeMo-It) to evaluate the macroeconomic impact of the Italian Citizen Income (<i>Reddito di Cittadinanza (RdC)</i>), a major policy instrument aimed at reducing poverty. The counterfactual simulations show stronger effects than those obtained under the baseline specification, as the extended model captures the reduction in income inequality generated by the policy. This mechanism amplifies the positive impact on GDP and other macroeconomic aggregates, including investment, reinforcing the Keynesian interpretation of the link between income distribution and aggregate consumption.</p>

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

Assessing the Impact of Inequality on the Aggregate Consumption Function: Evidence from Italy

  • 期刊论文

  • 发表日期：

    2026年4月27日

查看全文
  • Fabio Bacchini,
  • Daniela Fantozzi,
  • Linda Galizzi,
  • Davide Zurlo

摘要

This paper contributes to the macroeconomic debate on the relationship between income inequality and aggregate consumption by focusing on Italy, one of the largest economies in Europe, which experienced a significant increase in inequality before the COVID-19 crisis. The analysis follows a two-step approach. First, building on previous macroeconomic studies, we extend the aggregate household consumption function by including measures of inequality, namely the Gini index, the P80/P20 ratio, and the P90/P10 ratio. Second, the extended consumption function is embedded in the macroeconometric model of the Italian economy (MeMo-It) to evaluate the macroeconomic impact of the Italian Citizen Income (Reddito di Cittadinanza (RdC)), a major policy instrument aimed at reducing poverty. The counterfactual simulations show stronger effects than those obtained under the baseline specification, as the extended model captures the reduction in income inequality generated by the policy. This mechanism amplifies the positive impact on GDP and other macroeconomic aggregates, including investment, reinforcing the Keynesian interpretation of the link between income distribution and aggregate consumption.