Coordinate Space versus Index Space Representations as Estimation Methods: An Application to How Macro Activity Affects the U.S. Income Distribution.

This paper examines the impact of macroeconomic variables on the level of income inequality in the United States. Here the authors introduce what is known as an index space representation to do so. In an index space representation, income shares are considered as a linear combination of what are known as index functions. An index function is a polynomial function whose order is specified by the given index. The macroeconomic variables affect the function parameters corresponding to each index function. In early years, the authors have only quintile data but they can still derive a well-behaved Lorenz curve and many summary inequality measures.