TY - JOUR

T1 - Further evidence on inflation targeting and income distribution

AU - Vasilakis, Chrysovalantis

AU - Thornton, John

PY - 2024/10/29

Y1 - 2024/10/29

N2 - This paper examines the effect of inflation targeting (IT) on income distribution in a panel of 70 countries. Employing panel regressions and a variety of propensity score matching methods, we find strong evidence that that incomes became more unequal in IT-adopting countries relative to countries that did not adopt IT. Panel regressions suggest that Gini coefficients increased by 0.25 to 0.57% and the share of income of the top 1% and 10% of households increased by 0.7% in IT adopter countries. Using propensity score matching methods, IT has been associated with a relative rise in Gini coefficients of about 1-2 percentage points, and a relative increase in the share of national income going to the top 1% and 10% of households by about 11-13 percentage points and 13-17 percentage points, respectively. The results are robust to changes in country sample and alternative estimation methodologies

AB - This paper examines the effect of inflation targeting (IT) on income distribution in a panel of 70 countries. Employing panel regressions and a variety of propensity score matching methods, we find strong evidence that that incomes became more unequal in IT-adopting countries relative to countries that did not adopt IT. Panel regressions suggest that Gini coefficients increased by 0.25 to 0.57% and the share of income of the top 1% and 10% of households increased by 0.7% in IT adopter countries. Using propensity score matching methods, IT has been associated with a relative rise in Gini coefficients of about 1-2 percentage points, and a relative increase in the share of national income going to the top 1% and 10% of households by about 11-13 percentage points and 13-17 percentage points, respectively. The results are robust to changes in country sample and alternative estimation methodologies

U2 - 10.1002/soej.12743

DO - 10.1002/soej.12743

M3 - Article

JO - Southern Economic Journal

JF - Southern Economic Journal

SN - 0038-4038

ER -