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The effect of inflation and fiscal decentralization on income inequality in Sumatra Island of Indonesia: a panel data

Author

Listed:
  • Syahrimi

    (Sriwijaya University, Indonesia)

  • Anna YULIANITA

    (Sriwijaya University, Indonesia)

  • Ariodillah HIDAYAT

    (Sriwijaya University, Indonesia)

Abstract

The aim of this research is to analyze the relationship between the influence of the fiscal independence index, regional spending and inflation on income inequality in ten provinces on the island of Sumatra. This research uses panel data regression, namely the Fixed Effect Model (FEM). The findings of this research indicate that regional spending has a significant negative relationship with income inequality. The role of regional spending has an impact on reducing income inequality. The fiscal independence index has a significant negative effect on reducing income inequality. Inflation has a positive and significant relationship to income inequality.

Suggested Citation

  • Syahrimi & Anna YULIANITA & Ariodillah HIDAYAT, 2025. "The effect of inflation and fiscal decentralization on income inequality in Sumatra Island of Indonesia: a panel data," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(642), S), pages 167-186, Spring.
    • Handle: RePEc:agr:journl:v:xxxii:y:2025:i:1(642):p:167-186
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    References listed on IDEAS

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    1. Kanbur, Ravi & Ortiz-Juarez, Eduardo & Sumner, Andy, 2024. "Is the era of declining global income inequality over?," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 45-55.
    2. Batuo, Michael E. & Kararach, George & Malki, Issam, 2022. "The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces," World Development, Elsevier, vol. 157(C).
    3. Yener Altunbaş & John Thornton, 2022. "Does inflation targeting increase income inequality?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 45(4), pages 558-580, October.
    4. Xiao Yan & Saidatulakmal Mohd, 2023. "Trends and Causes of Regional Income Inequality in China," Sustainability, MDPI, vol. 15(9), pages 1-18, May.
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