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Federal Reserve Bank of Chicago
Chicago Fed Letter
Inequality and Recessions
Eugene Amromin
Mariacristina De Nardi
Karl Schulze

The increase in inequality over the past several decades has received widespread attention from both academics and the public at large. While much of this discourse centers on either the causes or normative implications of increasing inequality, it is important to ask whether the widening gap between the rich and poor has any direct effects on macroeconomic aggregates and, in particular, on the severity of the Great Recession, when output and consumption dropped precipitously and were slow to recover (see figure 1).

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Eugene Amromin & Mariacristina De Nardi & Karl Schulze, "Inequality and Recessions" , Federal Reserve Bank of Chicago, Chicago Fed Letter, number 392, 2018.
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Keywords: Households; inequality; recession
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