Income Inequality, Household Debt, and Consumption Growth in the United States
Round 1
Reviewer 1 Report
I advise the author to remove all the redundant parts as there are many repetitions throughout the manuscript.
1. The introduction lacks theoretical foundation and background. Its current form looked a bit scattered, which needs to be restructured in a more systematic manner. The authors need to focus better on the problem underlying the paper and clarify the theoretical setting of the research in a specific and linear way. There is too much redundant information about specific countries. Instead, the authors should focus on theoretical review and gaps. Emphisize novelty and originality of the study
2. The introduction section is quite long. There is a need to indicate clearly what the value, originality and significance to the literature of the study is. Minimize the introduction by removing redundancies. Also, reorganize content so that all figures from Introduction section are put into ‘Literature review’, subsection ‘background of the study’.
Also paper is very long and introduces wide descriptions to the reader, The knowledgable audiences will find the paper not very interesting as the contribution to the field and even field of sustainability is low. For instance there is a whole page of details about income inequality which are well known.
3. As the paper is mostly descriptive more literature is neccessary to justify the study. Consider including these articles to help with the background and other elements of the paper, especially when it comes to summarizing empirical studies that have recently investigated elements on income inequality and household debt, such as:
·
Research on the emission reduction effects of carbon trading mechanism on power industry: plant-level evidence from China. International Journal of Climate Change Strategies and Management. doi: 10.1108/IJCCSM-06-2022-0074
Does the porter hypothesis work well in the emission trading schema pilot? Exploring moderating effects of institutional settings. Research in International Business and Finance, 62, 101732. doi: https://doi.org/10.1016/j.ribaf.2022.101732
Government spending and intergenerational income mobility: Evidence from China. Journal of Economic Behavior & Organization, 191, 387-414. doi: https://doi.org/10.1016/j.jebo.2021.09.005
COVID-19 Pandemic Implications for Corporate Sustainability and Society: A Literature Review. International Journal of Environmental Research and Public Health, 19(3), 1592.
· Rutt, B. How Our Psychology Makes Inflation Worse Purchasing Decisions+ Psychology= Rising Prices.
4. Literature review should clearly and systematically discuss the current situation and prior research concerning three major variables. Some literature that would be useful Socio-economic Disparity Problems and Convergence Policy in the EU States. Journal of International Business Research and Marketing, 2(1), 41-48. Please add subheadings for each to make it easier to navigate through text
5. Moreover, there is an evident lack of references in Literature review and discussion, and generally, the number of references is unsubstantial. Author has clearly put a lot of effort in developing the discussion on the subject, however, while trends can be supported by statistical indicators, claims on correlation and predictions should be affirmed by prior findings. Otherwise, some of the assumptions on the correlation may appear speculative rather than objective.
6. The research method section should contain theoretical support for each statement. So first include the paragraphs and then hypothesis.
7. Insert Figure 10 in your research mode development, e.g., at the end of the literature review.
8. Please create ‘Limitations and future directions’ sections, and insert lines 506-513
Finally the paper could be made more concise and seems as it requires more editing to reduce insignificant sentences.
Author Response
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Author Response File: 
Author Response.pdf
Reviewer 2 Report
Referee report for “income inequality, Household debt and consumption growth in US”, Sustainability
This paper studies the relationship between income inequality, household debt and consumption growth in the United States, using a SV-TVP-VAR model. I think the study investigates an interesting question but I have the some major concerns:
Major comments:
i. The authors should elaborate more on the contribution of the paper. It is not clear to the reader the novelty of the paper and in which aspects it differentiates from the related literature. The authors provide an extensive literature review (which is difficult to read it due to the lack of paragraphs, i.e., pages 6-7 are a single paragraph), in which they simply state the previous related literature and the contribution of each author, without clearly identify how these papers are related to their work and how their paper differs from them. Also, the contribution of the paper should be included in the introduction section, which is not the case in this paper.
ii. In section 4.2 which discusses the results, the authors claim that the short term widening of income inequality leads low-income households to raise consumption due to the “keeping up with the Joneses effect”. It would be useful here to provide some papers that deal with this issue.
iii. In the same section, in page 11, the authors find that the increase of the US household debt reduces the level of consumption, with higher negative effects in the long term. I am not sure about the novelty of this result; in fact, this result is not new and has previously extensively discussed by the literature. In general, the authors should elaborate more on the discussion of their results and what is the novelty of their paper compared to the literature.
iv. Section 5 is irrelevant. Initially, this is not a discussion of the results. It provides insights for other economies. I cannot understand how this section is useful to their analysis. How China and South Africa are related to US? They are completely different economies. I strongly believe that the authors should concentrate their analysis only on US (as their data and methodology refer only to US) and avoid the discussion of other countries. Their results should not be generalized; they are relevant only to US. Otherwise, they could use the same method to analyze other economies (e.g., China) or use a panel VAR model.
v. In the introduction sector the authors claim that the reduction of income taxes increase income inequality. I believe that the authors should provide some additional insights of the related literature that deals with the theoretical background about the growth effects of the reduction of income taxes, as well as their effects on income inequality. For example, the theoretical literature claims that the reduction of income taxes (accompanied by increases in consumption tax) increases output but has adverse effects on income inequality (see, e.g., Economides and Rizos (2018), Correia (2010) and Krusell et al (1996))
vi. In a similar vein, the authors claim that the power of trade unions is weakening, widening the income gap. However, a strand of the literature suggests that the liberalization of labour markets leads to a more equitable distribution of income (Koliousi et al, 2017).
Correia, I. (2010): Consumption taxes and redistribution, American Economic Review, 100, 1673-1694.
Economides, G and A. Rizos (2018): Optimal taxation and the tradeoff between efficiency and redistribution, Review of Economic Analysis, 10, 1-43.
Koliousi, P., Miaouli, N., & Philippopoulos, A. (2017). Liberalization of product and labor markets: Efficiency and equity implications. Journal of Macroeconomics, 53, 92-106.
Krusell, P., V. Quadrini and J. Rios-Rull (1996): Are consumption taxes really better than income taxes?, Journal of Monetary Economics, 37(3), 475-503.
Author Response
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Author Response File: Author Response.pdf
Round 2
Reviewer 1 Report
Some improvements are made to the paper. However, newly addd parts also lack support and sources of data. And new issues were identifed
1. For instance many statements in the paper that do not have any source, such as "Before the late 1970s, the ratio of consumption to GDP in the U.S. kept around 60%. Since the 1980s, the ratio has continued to rise, reaching 67.2% in 2020"
2. The following comment has not been fully addressed, and literature that would assist to expand the topic and provide the background was not considered. As the paper is mostly descriptive more literature is neccessary to justify the study. Consider including these articles to help with the background and other elements of the paper, such as: · Research on the emission reduction effects of carbon trading mechanism on power industry: plant-level evidence from China. International Journal of Climate Change Strategies and Management. doi: 10.1108/IJCCSM-06-2022-0074 ·Does the porter hypothesis work well in the emission trading schema pilot? Exploring moderating effects of institutional settings. Research in International Business and Finance, 62, 101732. doi: https://doi.org/10.1016/j.ribaf.2022.101732 ·Government spending and intergenerational income mobility: Evidence from China. Journal of Economic Behavior & Organization, 191, 387-414. doi: https://doi.org/10.1016/j.jebo.2021.09.005 · COVID-19 Pandemic Implications for Corporate Sustainability and Society: A 5 Literature Review. International Journal of Environmental Research and Public Health, 19(3), 1592. · Rutt, B. How Our Psychology Makes Inflation Worse Purchasing Decisions+ Psychology= Rising Prices.
3. Literature review should clearly and systematically discuss the current situation and prior research concerning three major variables. Some literature that would be useful Socio-economic Disparity Problems and Convergence Policy in the EU States. Journal of International Business Research and Marketing, 2(1), 41-48. Please add subheadings for each to make it easier to navigate through text.
4. The figures in the revised version are not of sufficient quality.
And a figure including indicators and values should be drawn.
5. The materials and methods section should clearly indicate what you measured and how you measured it, and how you have approved those as a proper measure.
Also the statistical process in terms of steps taken should be more evident.
6. The results section does not include that much results, as it does the discussion of results. Make sure that results report the statistical indicators, and what was found, whereas the discussion interprets in the context, consists of findings and implications.
Overall the weakneesses of the paper is the contribution part, and engagement with literature. Your paper is advised to include at least 60 references. Also need to proofread it once again.
Once comments are fully addressed paper could warrant publication.
Author Response
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Author Response File: Author Response.pdf
Reviewer 2 Report
The authors addressed the majority of my comments and the new manuscript has significanlty improved compared to the initial one.
However, I have some minor concerns about the English language and style. I suggest that the authors should elaborate more on this, checking for typos and improving the English language.
Author Response
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Author Response File: Author Response.pdf
Round 3
Reviewer 1 Report
can further polish the manuscript and provide more detailed review and support
Author Response
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