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Top 1% and inequality connectedness in the EMU and WB

Author

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  • Bojaj, Martin M.
  • Djurovic, Gordana
  • Fabris, Nikola
  • Milovic, Nikola

Abstract

This study analyzes the connectedness of income inequality, governance, and key macroeconomic factors in the European Economic and Monetary Union (EMU) and Western Balkans (WB). Using data from 2006 to 2019, we measure spillover connectedness in the economies due to shocks to (a) inequality, (b) governance, and (c) key macroeconomic factors. Contrary to assumptions, the top 1% and government effectiveness are big contagion transmitters poised to wreak havoc on the WB and the EMU. Our novel findings indicate that the EU has to immediately assist the WB in stabilizing the inequality since the dangerous and growing inequality is a historical violent shock for the WB and the EMU.

Suggested Citation

  • Bojaj, Martin M. & Djurovic, Gordana & Fabris, Nikola & Milovic, Nikola, 2023. "Top 1% and inequality connectedness in the EMU and WB," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 139-155.
    • Handle: RePEc:eee:reveco:v:83:y:2023:i:c:p:139-155
    DOI: 10.1016/j.iref.2022.08.023
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    More about this item

    Keywords

    Inequality; Connectedness; Macroeconometrics; Policy objective; Governance;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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