Date/Time Date(s) - 31/10/202511:00 am - 12:30 pm
Dr. Yoosoon Chang is a Professor of Economics and Executive Director of the Economic Machine Learning (EML) Lab at Indiana University, with a Ph.D. in Economics from Yale University. She serves as an Advisor to the Stone Center for Research in Wealth Inequality and Mobility at the University of Chicago and served as President of the Korea America Economic Association. She also serves as Coordinator of the Midwest Econometrics Group (MEG) and Co-organizer of the Symposium of Econometric Theory and Applications (SETA). Her research develops cutting-edge time series, panel data, and machine learning methodologies to address critical economic challenges including income inequality, climate change, and monetary policy effects. She has pioneered applications of functional time series and regime-switching models to analyze intergenerational mobility and policy impacts on income distribution. Her work has been published in premier journals including Review of Economic Studies, Quantitative Economics, and Journal of Econometrics, and has been funded by the National Science Foundation and international agencies. She holds editorial positions at top economics journals including Journal of Economic Literature, Journal of Econometrics, and Journal of Applied Econometrics, and is an elected fellow of the Journal of Econometrics and International Association for Applied Econometrics. Dr. Chang has delivered keynote and invited talks at major international conferences, including the 2025 World Knowledge Forum where she presented research based on this paper and moderated a session by 2024 Nobel laureate James Robinson; former Canadian Prime Minister Justin Trudeau presented a keynote at the same forum. For more information, visit Yoosoons website here, the Economics Machine Learning Lab, and the World Knowledge Forum.
Yoosoon will present, “How Do Macroaggregates and Income Distribution Interact Dynamically? A Novel Structural Mixed Autoregression with Aggregate and Functional Variables”, co author with Soyoung Kim (Seoul National University) and Joon Y. Park (Indiana University).
Abstract
This paper investigates the interactions between macroeconomic aggregates and income distribution by developing a structural VAR model with functional variables. With this novel empirical approach, we are able to identify and analyze the effects of various shocks to the income distribution on macro aggregates, as well as the effects of macroeconomic shocks on the income distribution. Our main findings are as follows: First, contractionary monetary policy shocks reduce income inequality when focusing solely on the redistributive effects, without considering the negative impact on aggregate (or average) income levels. This improvement is achieved by reducing the number of low and high-income households while increasing the proportion of middle-income households. However, when the aggregate income shift is also taken into account, contractionary monetary policy shocks worsen income inequality. Second, shocks to the income distribution have a substantial effect on output fluctuations. For example, income distribution shocks identified to maximize future output levels have a significant and persistent positive effect on output, contributing up to 30% at long horizons and over 50% for the lowest income percentiles. On the other hand, alternative income distribution shocks identified to minimize the future Gini index do not have any significant negative effects on output. This finding, combined with the positive effect of output-maximizing income distribution shocks on equality, suggests that properly designed redistributive policies are not subject to the often-claimed trade-off between growth and equality. Moreover, variations in income distribution are primarily explained by shocks to the income distribution itself, rather than by aggregate shocks, including monetary shocks. This highlights the need for redistributive policies to substantially alter the income distribution and reduce inequality.