IDEAS home Printed from https://ideas.repec.org/a/eee/quaeco/v68y2018icp266-282.html
   My bibliography  Save this article

Exchange rate changes and income distribution in 41 countries: Asymmetry analysis

Author

Listed:
  • Bahmani-Oskooee, Mohsen
  • Motavallizadeh-Ardakani, Amid

Abstract

Due to the slow adjustment of wages to inflationary effects of currency depreciation, income could be shifted from workers to producers. Could currency appreciation do the opposite? We investigate the asymmetric effects of exchange rate changes on a measure of income distribution in each of the 41 countries for which a GINI coefficient is available. Applying recent asymmetry error-correction modeling and asymmetry cointegration of Shin et al. (2014) provides support for short-run asymmetric effects in 34 countries and long-run asymmetric effects in 22 countries, a unique discovery that was masked by previous research. The asymmetric effects revealed that while depreciations had unequalizing effects in 10 countries, they had equalizing effects in only five countries.

Suggested Citation

  • Bahmani-Oskooee, Mohsen & Motavallizadeh-Ardakani, Amid, 2018. "Exchange rate changes and income distribution in 41 countries: Asymmetry analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 68(C), pages 266-282.
  • Handle: RePEc:eee:quaeco:v:68:y:2018:i:c:p:266-282
    DOI: 10.1016/j.qref.2017.11.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1062976917301734
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    2. Florian Verheyen, 2013. "Interest rate pass-through in the EMU – new evidence using the nonlinear ARDL framework," Economics Bulletin, AccessEcon, vol. 33(1), pages 729-739.
    3. Yu Hsing & David Smyth, 1994. "Kuznets's inverted-U hypothesis revisited," Applied Economics Letters, Taylor & Francis Journals, vol. 1(7), pages 111-113.
    4. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
    5. Delatte, Anne-Laure & López-Villavicencio, Antonia, 2012. "Asymmetric exchange rate pass-through: Evidence from major countries," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 833-844.
    6. Mohsen Bahmani-Oskooee & Hadise Fariditavana, 2016. "Nonlinear ARDL Approach and the J-Curve Phenomenon," Open Economies Review, Springer, vol. 27(1), pages 51-70, February.
    7. Sidney S. Alexander, 1952. "Effects of a Devaluation on a Trade Balance," IMF Staff Papers, Palgrave Macmillan, vol. 2(2), pages 263-278, April.
    8. Ahluwalia, Montek S, 1976. "Income Distribution and Development: Some Stylized Facts," American Economic Review, American Economic Association, vol. 66(2), pages 128-135, May.
    9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    10. Mohsen Bahmani-Oskooee & Scott W. Hegerty & Harvey Wilmeth, 2008. "Short-run and long-run determinants of income inequality: evidence from 16 countries," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(3), pages 463-484, April.
    11. Apergis, Nicholas & Miller, Stephen M., 2006. "Consumption asymmetry and the stock market: Empirical evidence," Economics Letters, Elsevier, vol. 93(3), pages 337-342, December.
    12. Ekaterini Panopoulou & Nikitas Pittis, 2004. "A comparison of autoregressive distributed lag and dynamic OLS cointegration estimators in the case of a serially correlated cointegration error," Econometrics Journal, Royal Economic Society, vol. 7(2), pages 585-617, December.
    13. Cline, William R., 1975. "Distribution and development : A survey of literature," Journal of Development Economics, Elsevier, vol. 1(4), pages 359-400, November.
    14. Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December.
    15. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January.
    16. Mohsen Bahmani-Oskooee, 1997. "Effects of devaluation on income distribution," Applied Economics Letters, Taylor & Francis Journals, vol. 4(5), pages 321-323.
    17. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
    18. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    19. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
    20. Muhammad Shahbaz & Faridul Islam & Muhammad Sabihuddin Butt, 2013. "Devaluation and Income Inequality Nexus: Evidence from Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 1(4), pages 48-58, April.
    21. Papanek, Gustav F. & Kyn, Oldrich, 1986. "The effect on income distribution of development, the growth rate and economic strategy," Journal of Development Economics, Elsevier, vol. 23(1), pages 55-65, September.
    22. Mohsen Bahmani-Oskooee & Abera Gelan, 2012. "On the relation between income distribution and economic growth," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 14(4), pages 249-273.
    23. M. Bahmani-Oskooee & A. Gelan, 2008. "Kuznets inverted-U hypothesis revisited: a time-series approach using US data," Applied Economics Letters, Taylor & Francis Journals, vol. 15(9), pages 677-681.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Income distribution; Exchange rate; Nonlinear ARDL; Asymmetry; 41 countries;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:quaeco:v:68:y:2018:i:c:p:266-282. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/620167 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.