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The impact of macroeconomic factors on income inequality: Evidence from the BRICS

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  • Berisha, Edmond
  • Gupta, Rangan
  • Meszaros, John

Abstract

In this paper we investigate how the evolution of income growth, real interest rates, and inflation have driven income inequality across a variety of countries with particular focus on the BRICS economies (Brazil, Russia, India, China, and South Africa) during the period 2001 to 2015. Our work suggests that, when central banks of the BRICS economies use monetary policy for macroeconomic stabilization, they need to consider the impact monetary policy changes have on the distribution of income in their nations. Our estimates reveal that the unintended consequence of policies that induce economic growth and higher prices is higher income inequality. We find that the positive relationship between the three macroeconomic variables and income inequality for the BRICS economies is stronger during the post-2008 period.

Suggested Citation

  • Berisha, Edmond & Gupta, Rangan & Meszaros, John, 2020. "The impact of macroeconomic factors on income inequality: Evidence from the BRICS," Economic Modelling, Elsevier, vol. 91(C), pages 559-567.
    • Handle: RePEc:eee:ecmode:v:91:y:2020:i:c:p:559-567
    DOI: 10.1016/j.econmod.2019.12.007
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    More about this item

    Keywords

    Monetary policy; Inflation; Income growth; Interest rates; Emerging economies; BRICS;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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