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Business cycles and redistribution: The role of government quality

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  • Muinelo-Gallo, Leonel

Abstract

We study how government quality mediates the relationship between business cycles and redistribution. Our key hypothesis is that the potential of income redistribution to reduce rising inequality levels after an economic crisis depends on government quality. The empirical evidence based on a panel of 46 countries over the period 1996–2016 lends strong support to this hypothesis. We find that macroeconomic recessions promote redistribution of income in high government quality contexts, but they lead to wider economic inequalities in countries with poor quality of government.

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  • Muinelo-Gallo, Leonel, 2022. "Business cycles and redistribution: The role of government quality," Economic Systems, Elsevier, vol. 46(4).
    • Handle: RePEc:eee:ecosys:v:46:y:2022:i:4:s0939362522000632
    DOI: 10.1016/j.ecosys.2022.101001
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    More about this item

    Keywords

    International business cycles; Redistribution; Government quality;
    All these keywords.

    JEL classification:

    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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