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Inequality and aggregate demand in the is-lm and is-mp models

Jump, Robert Calvert



© 2017 Board of Trustees of the Bulletin of Economic Research and John Wiley & Sons Ltd This paper presents an extension to the textbook IS-LM and IS-MP models that allows the short run effects of an increase in household income inequality to be studied in a simple manner. The income distribution is assumed to be log-normal, and the coefficient of variation of income is assumed to be exogenous. The latter is used as the measure of income inequality, and enters otherwise standard IS and LM curves in a straightforward manner. While the models are highly stylised, they can easily be extended to more complicated variants.


Calvert Jump, R., & Jump, R. (2018). Inequality and aggregate demand in the is-lm and is-mp models. Bulletin of Economic Research, 70(3), 269-276.

Journal Article Type Article
Acceptance Date Jul 19, 2017
Publication Date Jul 1, 2018
Publicly Available Date Jul 2, 2020
Journal Bulletin of Economic Research
Print ISSN 0307-3378
Electronic ISSN 1467-8586
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 70
Issue 3
Pages 269-276
Keywords inequality, IS-LM, IS-MP
Public URL
Publisher URL
Additional Information Additional Information : This is the peer reviewed version of the following article: [Jump, R. (2017) Inequality and aggregate demand in the IS-LM and IS-MP models. Bulletin of Economic Research. ISSN 1467-8586], which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.


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