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Income Inequality: Does Inflation Matter?

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  • Mr. Ales Bulir

Abstract

This paper contributes to the income inequality literature that is based on the traditional Kuznets model. Price stability, financial deepening, level of development, state employment, and fiscal redistribution are found to enhance income equality in a given country. While the effect of price stability is uniform for all levels of GDP per capita, the effect of financial deepening is found to increase with the level of development. Moreover, tight monetary policies do not seem to have any austere effects; low inflation reinforces, rather than counteracts, the income-equalizing effect of fiscal redistribution.

Suggested Citation

  • Mr. Ales Bulir, 1998. "Income Inequality: Does Inflation Matter?," IMF Working Papers 1998/007, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1998/007
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    Keywords

    WP; income; GDP; low-inflation country; Income distribution; inflation; Kuznets hypothesis; low inflation; inflation sensitivity; high-inflation steady state; inflation variable; Income inequality; Personal income; Price stabilization; Eastern Europe; Africa; Asia and Pacific;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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