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.
|Number of pages||12|
|Journal||Contemporary Economic Policy|
|Publication status||Published - 2000|
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Economics and Econometrics
- Public Administration