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Inflation, Growth, and Income Distribution: A Cross-Country Study

Author

Listed:
  • Hongyi Li

    (Department of Decision Sciences & Managerial Economics, Chinese University of Hong Kong)

  • Heng-fu Zou

    (Guanghua School of Management, Peking University
    Institute for Advanced Study, Wuhan University
    The World Bank)

Abstract

This short paper uses a newly compiled cross-country panel data on income distribution to explore the impact of inflation on income distribution and economic growth. We have found that inflation (1) worsens income distribution; (2) increases the income share of the rich; (3) has a negative but insignificant effect on the income shares of the poor and the middle class; and (4) reduces the rate of economic growth.

Suggested Citation

  • Hongyi Li & Heng-fu Zou, 2002. "Inflation, Growth, and Income Distribution: A Cross-Country Study," Annals of Economics and Finance, Society for AEF, vol. 3(1), pages 85-101, May.
    • Handle: RePEc:cuf:journl:y:2002:v:3:i:1:p:85-101
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    References listed on IDEAS

    as
    1. Eliana Cardoso & Andre Urani & Andre Urani, 1995. "Inflation and Unemployment as Determinants of Inequality in Brazil: The 1980s," NBER Chapters, in: Reform, Recovery, and Growth: Latin America and the Middle East, pages 151-176, National Bureau of Economic Research, Inc.
    2. Hongyi Li & Danyang Xie & Heng‐Fu Zou, 2000. "Dynamics of income distribution," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(4), pages 937-961, November.
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    4. D. E. W. Laidler & J. M. Parkin, 1977. "Inflation: A Survey," Palgrave Macmillan Books,, Palgrave Macmillan.
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    8. McCallum, Bennett T., 1990. "Inflation: Theory and evidence," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 18, pages 963-1012, Elsevier.
    9. 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.
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    11. Clark, Todd E, 1997. "Cross-country Evidence on Long-Run Growth and Inflation," Economic Inquiry, Western Economic Association International, vol. 35(1), pages 70-81, January.
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    More about this item

    Keywords

    Inflation; Income distribution; Growth;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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