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The impact of capital income on consumption
- 1 School of Finance, Nankai University, Tianjin, China
* Author to whom correspondence should be addressed.
Abstract
Against the backdrop of a complex and ever-changing global economy, with countries seeking effective policies to stimulate consumption, this paper aims to revisit the relationship between monetary policy and consumption. A dynamic model is constructed, and data from the United States spanning from 1972 to 2024 is collected for empirical analysis using methods such as OLS and GLS. The results show that the growth rate of personal consumption is positively correlated with the rate of capital return, while the impact of wage growth is not significant. When labor time remains unchanged, the wage growth rate is positively correlated with the capital return rate. The conclusion indicates that expansionary monetary policy has no direct link to increased consumption; rather, an increase in personal consumption is more dependent on capital income than labor income.
Keywords
monetary policy, interest rates, market return rate, consumption growth rate
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Cite this article
Xiao,B. (2025). The impact of capital income on consumption. Journal of Applied Economics and Policy Studies,18(1),1-10.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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