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Income inequality and inflation: the cross‐country evidence

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  • FA Al‐Marhubi

Abstract

Different strands of the political economy approach to macroeconomic policy imply a link between income inequality and inflation. This article tests this proposition using a newly assembled data set on income distribution. The results show that income inequality is associated with higher inflation. This association, although not economically large, holds for democracies as well as nondemocracies. Sensitivity analysis suggests that the results are not due to measurement error, reverse causation, or omitted variables.

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  • FA Al‐Marhubi, 2000. "Income inequality and inflation: the cross‐country evidence," Contemporary Economic Policy, Western Economic Association International, vol. 18(4), pages 428-439, October.
    • Handle: RePEc:bla:coecpo:v:18:y:2000:i:4:p:428-439
    DOI: 10.1111/j.1465-7287.2000.tb00039.x
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    Cited by:

    1. Bhattacharya, Joydeep, 2003. "Monetary policy and the distribution of income," ISU General Staff Papers 200304220700001192, Iowa State University, Department of Economics.
    2. Fiorio, Carlo V. & Saget, Catherine., 2010. "Reducing or aggravating inequality? : Preliminary findings from the 2008 financial crisis," ILO Working Papers 994564873402676, International Labour Organization.
    3. Eleftherios Thalassinos & Erginbay Ugurlu & Yusuf Muratoglu, 2012. "Income Inequality and Inflation in the EU," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 127-140.
    4. Kim, Dong-Hyeon & Lin, Shu-Chin, 2023. "Income inequality, inflation and financial development," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 468-487.
    5. Osama D. Sweidan, 2023. "Geopolitical Risk and Income Inequality: Evidence from the US Economy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 575-597, September.
    6. repec:ilo:ilowps:456487 is not listed on IDEAS
    7. Garc𨀍 & Prieto-Alaiz & Sim, 2013. "The influence of macroeconomic factors on personal income distribution in developing countries: a parametric modelling approach," Applied Economics, Taylor & Francis Journals, vol. 45(30), pages 4323-4334, October.
    8. Osama D. Sweidan, 2023. "The Effect of Geopolitical Risk on Income Inequality: Evidence from a Panel Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 167(1), pages 47-66, June.

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