How much does inequality matter for the business cycle and vice versa? Using a Bayesian likelihood approach, we … income risk and taxes. We find that adding data on inequality does not materially change the estimated shocks and frictions … income inequality. The systematic components of monetary and fiscal policy are important for inequality as well. …

inequality, while fiscal expansions lower inequality. The results are robust to several measures of income distribution and size … medium-term inequality multiplier. This is on average about 1 in our sample, meaning that a cumulative decrease in government …