Abstract
This note utilizes a cubic polynomial to model the cyclical behaviour of income inequality in the U.S. from 1947 to 2000. Linear and quadratic models have been used to explain the pattern, but they are not capable of detecting more than one extreme point. The simplest model capable of detecting a cycle is a cubic polynomial. By detecting the inflection points, the model can “predict” the turning points, from convergence to divergence. The model performs better with nominal data than with real data. (JEL 015, 040)
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Naghshpour, S. The cyclical nature of family income distribution in the united states: An empirical note. J Econ Finan 29, 138–143 (2005). https://doi.org/10.1007/BF02761549
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DOI: https://doi.org/10.1007/BF02761549