THE DEPENDENCE BETWEEN REDUCING INCOME INEQUALITY AND MACROECONOMIC STABILITY
Keywords:
income inequality, macroeconomic stability, redistribution, economic growth, aggregate demand, social transfers, human capital, financial stability, economic resilience, policy interventions.Abstract
Income inequality has become a major concern for both developed and developing economies, affecting social cohesion, economic growth, and macroeconomic stability. This paper investigates the relationship between reducing income inequality and achieving stable economic performance. Drawing on theoretical frameworks and empirical evidence, the study examines how income redistribution mechanisms—such as progressive taxation, social transfers, and investment in education and healthcare—can influence macroeconomic indicators including aggregate demand, employment, financial stability, and output volatility. The findings suggest that more equitable income distribution enhances economic resilience by promoting consumption, strengthening human capital, and fostering social cohesion, while high inequality tends to exacerbate economic fluctuations and increase vulnerability to financial crises. Policymakers are encouraged to integrate inequality reduction into broader macroeconomic strategies to achieve sustainable, inclusive, and stable economic growth.
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