The U.S.-Sino different links between income and consumption inequality

ABSTRACT

This work shows that the U.S.-Sino diverse links between income and consumption inequality have to do with their different development levels and policy orientations. Foreign trade, financial markets, and capital flows are used for consumption smoothing in the U.S. but for economic growth in China. Other smoothing schemes are better developed in the U.S. than in China. As a result, income and consumption inequalities are linked loosely in the U.S. burdened with an external deficit but closely in China faced with a persist surplus.

KEYWORDS:

• Income inequality
• consumption inequality
• global imbalances
• trade

JEL CLASSIFICATION:

• D63
• E2
• E21
• F32
• F41
• O24

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Universidade de Macau [MYRG2018-00122-FBA and MYRG2018-00140-FBA].