scholarly journals Economic Freedom and Income Inequality: Evidence from a Panel of Global Economies- A Linear and a Non-Linear Long-Run Analysis

2015 ◽  
Vol 85 (1) ◽  
pp. 88-105 ◽  
Author(s):  
Nicholas Apergis ◽  
Arusha Cooray
Keyword(s):  
Income Inequality ◽  
Economic Freedom ◽  
Long Run ◽  
Non Linear

A panel vector AutoRegression analysis of income inequality dynamics in each of the 50 states of USA

2017 ◽  
Vol 44 (6) ◽  
pp. 797-815
Author(s):  
Olugbenga Onafowora ◽  
Oluwole Owoye
Keyword(s):  
Income Inequality ◽  
Educational Attainment ◽  
Capita Income ◽  
Economic Freedom ◽  
Vector Autoregression ◽  
Population Ageing ◽  
Content Type ◽  
Long Run ◽  
Per Capita ◽  
Panel Vector Autoregression

Purpose The purpose of this paper is to investigate the income inequality dynamics in each of the 50 states of USA over the period 1981-2011. Design/methodology/approach The paper estimates an augmented Kuznets curve panel Vector AutoRegression in per capita income, economic freedom, educational attainment, unemployment, and population ageing along with evaluating generalized impulse responses functions (GIRF) and generalized forecast-error variance decompositions (GFEVD). Findings All the variables are integrated of order one and are panel cointegrated. Kuznets’ hypothesized inverted U-shaped relationship between inequality and growth is not supported by the data. Unemployment and population ageing have statistically significant positive effects on inequality in the long-run; education has statistically significant negative impact; economic freedom has statistically insignificant positive effect. Long-run bidirectional causality exists among the variables. GFEVD show that excluding income inequality itself, variation in income inequality is more influenced by perturbations in per capita income, educational attainment, and unemployment. GIRF corroborate the results of the GFEVD. Originality/value This paper fulfills an identified need to study the causal relationship between inequality and its determining factors without assuming the a priori exogeneity or endogeneity of the underlying variables.

scholarly journals Is Inflation Regressive or Progressive? Long Run & Short Run Evidence from Pakistan

2010 ◽  
Author(s):  
Muhammad Shahbaz ◽  
Abu N. M. Wahid ◽  
Rukhsana Kalim
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Time Series Data ◽  
Least Square ◽  
Series Data ◽  
Advanced Technique ◽  
Ordinary Least Square ◽  
Long Run ◽  
Non Linear ◽  
Short Run

The present paper investigates an answer to a key question “is inflation regressive or progressive?” by utilizing time series data from 1971 up to 2005 with reference to Pakistan. The main focus of the study is on the inflation-inequality puzzle but other control variables are also included in the model that affect income distribution. We have utilized the most advanced technique FMOLS (Fully-Modified Ordinary Least Square) for long run and ECM (Error Correction Model) for short run dynamics. Our findings suggest that inflation is progressive in the case of Pakistan but with low magnitude. There is also a prevalence of a U-shaped relationship between inflation and income inequality in non-linear or non-monotonic phenomenon, but it is insignificant. Per capita income deteriorates income distribution, and seems to provide gains to non-poor individuals in the economy. Remittances as share of GDP, and human capital, also appear to increase income inequality in both periods but large size of the government seems to worsen income distribution in the long run. International trade and income inequality are positively correlated that confirms the existence of Leontief paradox in Pakistan not only in short run, but also in long run. Financial development declines income inequality insignificantly. Inverted U-shaped curve (Lafer-Curve) indicates an association of trade and income inequality in non-linear fashion insignificantly. This effort provides some new insights for policy makers and development planners in Pakistan.   Keywords: Inflation; inequality; fully modifed ordinary least square; Pakistan.  

scholarly journals Examining the relationship between income inequality, taxation and economic freedom: a panel cointegration approach

2020 ◽  
Vol 9 (3) ◽  
pp. 206-215
Author(s):  
Achillefs Karakotsios ◽  
Constantinos Katrakilidis ◽  
Dimitrios Dimitriadis ◽  
Theodoros Christoforidis
Keyword(s):  
Income Inequality ◽  
Economic Freedom ◽  
Causal Effect ◽  
Estimation Method ◽  
Panel Cointegration ◽  
Factors Affecting ◽  
Pooled Mean Group ◽  
Long Run ◽  
Important Challenge ◽  
Negative Impacts

Income inequality has become an important challenge for both developed and developing countries. Taxation and economic freedom are considered as important factors affecting income inequality. This paper aims at the empirical investigation of the causal relationships between income inequality, taxation and economic freedom by applying panel cointegration techniques and Pooled Mean Group (PMG) estimation method on a panel of 58 countries, over the period 1995–2016. The empirical evidence supports a bidirectional long-run causal effect between taxes-to-GDP ratio and income inequality with tax-to-GDP ratio to cause negative impacts on income inequality and thus revealing the redistributive role of taxes. Furthermore, we find a positive effect from economic freedom on income inequality, suggesting a trade-off between economic freedom and income equality.

A NOTE ON INFLATION, ECONOMIC GROWTH, AND INCOME INEQUALITY

2009 ◽  
Vol 13 (1) ◽  
pp. 138-147 ◽  
Author(s):  
Yi Jin
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Income Inequality ◽  
Endogenous Growth ◽  
Money Growth ◽  
Relative Importance ◽  
Long Run ◽  
Endogenous Growth Model ◽  
The Relationship ◽  
Negative Growth

This paper develops a monetary endogenous growth model with capital and skill heterogeneity to analyze the relationship among inflation, growth, and income inequality. In the model inflation, growth, and inequality are jointly determined. We show that an increase in the long-run money growth rate raises inflation and reduces growth, but its effect on income inequality depends on the relative importance of the two types of heterogeneity. Inequality shrinks with the rise of inflation when capital heterogeneity dominates and enlarges when skill heterogeneity dominates. Therefore, our model supports a negative (positive) inflation–inequality relationship and a positive (negative) growth–inequality relationship when capital (skill) heterogeneity dominates. In any event, inflation and growth are negatively related.

scholarly journals Economic freedom and growth: A panel cointegration approach

2016 ◽  
Vol 63 (5) ◽  
pp. 541-562 ◽  
Author(s):  
Bernur Acikgoz ◽  
Anthony Amoah ◽  
Mine Yilmazer
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Economic Freedom ◽  
Panel Cointegration ◽  
Government Regulations ◽  
Policy Makers ◽  
Country Group ◽  
Long Run ◽  
Growth Prospects

This study uses three-country group panel data from 1993 to 2011 in examining the long-run effect of tax burdens (Fiscal index) and government regulations of business (Business index) on economic growth. The outcome of the panel cointegration approach suggests that the variables have a long-run relationship with economic growth. The study finds all the signs of the variables used to be consistent with theoretical expectations. Regarding the variables of interest, it is also found that the Fiscal index has a positive and significant effect on economic growth for all three-country groups. In addition, the Business index has a positive and significant effect for only two-country groups. The study finds that tax burdens and government regulations play an important role on economic growth for most countries in the sample. To harness economic growth prospects, the study offers recommendations for policy makers to consider.

scholarly journals Asymmetric Effects of Exchange Rate on Monetary Policy in Emerging Countries: A Non-Linear ARDL Approach in Uganda

2020 ◽  
Vol 7 (5) ◽  
pp. 24
Author(s):  
Allan Kayongo ◽  
Asumani Guloba ◽  
Joseph Muvawala
Keyword(s):  
Exchange Rate ◽  
Money Demand ◽  
Economic Uncertainty ◽  
Ardl Model ◽  
Real Money ◽  
Asymmetric Effects ◽  
Long Run ◽  
Non Linear ◽  
Short Run ◽  
Exchange Rate Depreciation

Many money demand studies have been carried out on Uganda, however, these studies perceive and incorporate exchange rate as a linear determinant of real money demand. Indeed, exchange rate may have asymmetric effects on real money demand; with exchange rate appreciation having different effects from exchange rate depreciation. Therefore, this is the first study to estimate exchange rate asymmetries in Uganda, for the period 2008Q3 and 2018Q4. The study uses both the linear ARDL and non-linear ARDL methodologies to accomplish its goal. This is also done by incorporating an economic uncertainty index, which is critical, especially in light of the novel global coronavirus pandemic, that has disrupted trade, movement and supply chains. The error correction terms of both models are negative and significant, with the one of the non-linear ARDL twice as much as that of the linear ARDL. Indeed, the study confirms the existence of exchange rate asymmetries on Uganda’s real money demand. In the linear ARDL model, exchange rate has a positive effect in the long run but a negative result in the short run. On one hand, the non-linear ARDL model reveals that an exchange rate depreciation of the Uganda Shillings negatively affects real money demand in the short run. On the other hand, an exchange rate appreciation positively effects real money demand. Notably, economic uncertainty has insignificant effects in both models, except for its lags in the non-linear model. The implication of these findings is that macro-economic policy management in Uganda should be cognizant of these asymmetric effects of exchange rate, for effective planning, policy and implementation.

Income inequality and CO2 emissions: Empirical evidence from Turkey

2018 ◽  
Vol 30 (3) ◽  
pp. 444-461 ◽  
Author(s):  
Caner Demir ◽  
Raif Cergibozan ◽  
Adem Gök
Keyword(s):  
Income Inequality ◽  
Environmental Degradation ◽  
Environmental Quality ◽  
Environmental Kuznets Curve ◽  
Kuznets Curve ◽  
Aggregate Consumption ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

The aim of the study is to investigate the impact of income inequality on environmental quality in Turkey within the Environmental Kuznets Curve framework. In order to observe the short-run and long-run effects of income inequality on environmental quality, an autoregressive distributed lag bounds test on CO2 emission has been employed for the period 1963–2011 of Turkey. The results of the analysis reveal that there is a negative association between CO2 emission level and income inequality, which implies that increasing income inequality reduces environmental degradation in Turkey. Hence, a greater inequality in the society leads to less aggregate consumption in the economy due to lower propensity to emit in the richer households resulting in better environmental quality. The findings confirm an argument in the existing literature, which suggests that for developing countries, until a certain level of development, environmental degradation increases as income inequality in the society decreases. The results also confirm the Environmental Kuznets Curve hypothesis.

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