Date of Graduation


Document Type


Degree Type



College of Business and Economics



Committee Chair

Eric Olson

Committee Co-Chair

Arabinda Basistha

Committee Member

Brian Cushing

Committee Member

Jack Dorminey

Committee Member

Shuichiro Nishioka


This dissertation is a collection of three chapters. The first chapter empirically investigates the relationship between interest rates, the stock market, household debt, and the distribution of income in the U.S. The results indicate that increases in the stock market and household debt increase income inequality. Moreover, the relationship between the interest rate and income inequality is found to be negative and statistically significant.;The second chapter examines the relationship between the yield spread and the income distribution. The yield spread is known to be closely related with business cycles identified by the National Bureau of Economic Research. It is low near peaks and high near troughs. This chapter builds on this known relationship and examines the response of the income distribution in the U.S. due to variation in the yield spread. The purpose is to identify the significance and sign of the impact changes in economic conditions have on the distribution of income over the period 1927-2011. Clark and McCracken's (2001) 1-step ahead encompassing tests from nested linear models are initially estimated to determine the predictive power of the yield spread on the distribution of income. Results strongly reject the null hypothesis that the yield spread has no predictive content for changes in the distribution of income. Specifically, increases in the yield spread are found to correspond with subsequent increases in top income shares.;The third chapter analyses the importance of ECB monetary policy shocks in the domestic activities of a non-EMU member, Croatia, with the main focus on the inflation rate. Using a Vector Autoregressive Model with an exogenous variable specification, it is found that the contraction of foreign monetary shocks have a significant positive impact on the local inflation rate and output. Interestingly, the interest rate gap exerts a statistically significant effect on the economic activities of Croatia, suggesting that targeting exchange rate stability does not eliminate the significance of ECB's monetary policy changes.