Abstract
By employing unit root testing and cointegration procedures, this paper is the first study of its kind to present empirical evidence showing higher inflation rate, lower unemployment, and increased real per capita gross domestic product decreased the poverty rate among African American families during the 1966–99 period. The findings, estimated using the Phillips-Hansen fully modified OLS estimator, are also consistent with results obtained using Johansen’s maximum likelihood cointegration procedure. Long-run Granger causality, inferred by the estimated error-correction model, suggests that the African American poverty rate is not weakly exogenous and will respond to policy intervention.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Blank, Rebecca M., and Alan S. Blinder. 1986. “Macroeconomics, Income Distribution, and Poverty.” InFighting Poverty: What Works and What Doesn’t, edited by Sheldon H. Danziger and D. H. Weinberg. Cambridge: Harvard University Press.
Blank, Rebecca M. 2000. “Fighting Poverty: Lessons From Recent U.S. History.”Journal of Economic Perspectives 14(2): 3–20.
Blank, Rebecca M., and David Card. 1993. “Poverty, Income Distribution, and Growth: Are They Still Connected?”Brookings Papers on Economic Activity 2: 285–339.
Cutler, David M.m and Lawrence F. Katz. 1991. “Macroeconomic Performance and the Disadvantaged.”Brookings Papers on Economic Activity 2: 1–74.
Fuller, Wayne A. 1976.Introduction to Statistical Inference. New York: John Wiley and Sons.
Gottschalk, Peter, and Sheldon Danziger. 1995.America Unequal. Cambridge, MA: Harvard University Press.
Hargreaves, Colin P. 1994.Nonstationary Time Series Analysis and Cointegration. Oxford: Oxford University Press.
Hurst, Eric, Ming Ching Luoh, and Frank P. Stafford. 1998. “The Wealth Dynamics of American Families, 1984–94.” Brookings papers onEconomic Activity 1: 267–337.
Janti, Markus. 1994. “A More Efficient Estimate of the Effects of Macroeconomic Activity on the Distribution of Income.”Review of Economics and Statistics 76: 327–377.
Johansen, Soren, and Katerina Juselius. 1990. “Maximum Likelihood Estimation and Inference on Cointegration—With Applications to the Demand for Money.”Oxford Bulletin of Economics and Statistics 52: 169–210.
Kwiatkowski, Denis, Peter C. B. Phillips, Peter Schmidt, and Y. Shin. 1992. “Testing the Null Hypothesis of Stationarity against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?”Journal of Econometrics 1: 159–178.
Mishel, Lawrence, Jared Bernstein, and John Schmitt. 1999.The Status of Working America 1998–99. Economic Policy Institute. Ithaca, NY: Cornell University Press.
Myers, Samuel L., and William A. Darity. 1998.Persistent Disparity: Race and Economic Inequality in the United States Since 1945. Cheltenham, U.K.: Edward Elgar Publishers.
Parker, Simon C. 2000. “Opening a Can of Worms: The Pitfalls of Time Series Regression Analysis of Income Inequality.”Applied Economics 32: 221–230.
Parker, Simon C. 1999. “Income Inequality and the Business Cycle: A Survey of the Evidence and Some New Results.”Journal of Post Keynesian Economics 21: 201–225.
Phillips, Peter C. B., and Bruce E. Hansen. 1990. “Statistical Inference in Instrumental Variables Regressions with I(1) Processes.”Review of Economic Studies 57: 99–125.
Phillips, Peter C. B., and Pierre Perron. 1998. “Testing for a Unit Root in Time Series Regression.”Biometrics 54: 335–346.
Romer, Christina D., and David H. Romer. 1999. “Monetary Policy and the Well-Being of the Poor.”Economic Review Federal Reserve Bank of Kansas City 84: 21–49.
Tobin, James. 1994. “Poverty in Relation to Macroeconomic Trends, Cycles and Policies.” InConfronting Poverty: Prescriptions for Change, edited by S. H. Danziger, G. Sandefur, and D. H. Weinberg. Cambridge: Harvard University Press.
Urbain, Jean-Pierre. 1992. “On Weak Exogeneity in Error-Correction Models.”Oxford Bulletin of Economics and Statistics 54: 197–208.
U.S. Bureau of the Census.Current Population Reports, various years.
U.S. Bureau of the Census.Historical Poverty Statistics, various years.
U.S. Department of Commerce. Bureau of Economic Analysis (National Income Accounts) various years.
U.S. Government Printing Office.Economic Report of the President, Washington, DC, various years.
Wickens, Michael R. 1996. “Interpreting Cointegrating Vectors and Common Stochastic Trends.”Journal of Econometrics 74: 255–271.
Zavodny, Madeline, and Tao Zha. 2000. “Monetary Policy and Racial Unemployment Rates,”Economic Review Federal Reserve Bank of Atlanta 85(4): 1–16.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Murthy, V.N.R. Macroeconomy and the well-being of low income African American families. J Econ Finan 26, 327–333 (2002). https://doi.org/10.1007/BF02759715
Issue Date:
DOI: https://doi.org/10.1007/BF02759715