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Do Real Depreciations Reduce the Income Gap between the Rich and the Poor?

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  • Guangjun Qu

Abstract

This study concentrates on the effect of real depreciations of a currency on one key aspect of economic development, the distribution of income. Based upon the recent availability of a real depreciation index and two databases on Gini coefficients, we investigate how real depreciations affect levels and changes in the distribution of income. The panel evidence of more than 158 countries indicates that real depreciations are associated with a decline in levels of income gap between the rich and the poor. They, however, have no statistically significant association with changes in the distribution of income. Therefore, the relationship between real depreciations and levels of the distribution of income is likely to stem from reverse causality. Our main findings may help policymakers who attempt to use a currency depreciation policy fully realize that the policy at least does not hurt the poor.

Suggested Citation

  • Guangjun Qu, 2017. "Do Real Depreciations Reduce the Income Gap between the Rich and the Poor?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(3), pages 266-274, March.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:3:p:266-274
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    References listed on IDEAS

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    More about this item

    Keywords

    real depreciation; income distribution; reserve causality;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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