Generate QR code
Open Access
Subscription Access
Inflation and income inequality: Relationship research in the regional aspect
https://doi.org/10.32609/042-8736-2023-4-151-160
Abstract
The paper examines the question of whether inflation and inequality are interrelated. The data panel formed based on Rosstat information. The econometric modeling methodology included the identification of separate panel regressions for the consumer price index (CPI) and the Gini coefficient, as well as equations systems for these indicators, including equations systems for food inflation, nonfood products and services, as well as quantiles of population distribution by income. A two-way positive relationship between the CPI for goods and services and the Gini coefficient by region was empirically obtained. However, the result is asymmetric and typical for the CPI for food products and for the fifth income quintile. For the CPI for non-food goods/services/the first quintile of the income distribution, the result changes to a negative two-way relationship. The obtained results allow taking into account the unequal income of the population when making decisions by the Bank of Russia on monetary policy, as well as emphasize the effectiveness of government measures to equalize income of the population in order to contain inflationary processes.
About the Author
S. V. Arzhenovsky
Bank of Russia;
Rostov State University of Economics
Russian Federation
Russian Federation
Sergey V. Arzhenovsky
Rostov-on-Don
References
1. Bozhechkova A. V., Vashchelyuk N. V., Nazarov P. A., Perevyshin Y. N., Tumanova E. A., Shagas N. L. (2015). Modeling the effects of economic policy and changes in the behavior of economic agents. Moscow: PANEPA. (In Russian).. https://doi.org/10.2139/ssrn.2584960
2. Gershman B. A. (2009). Income inequality and economic growth: An empirical survey. Economicheskaya Nauka Sovremennoy Rossii, No. 2, pp. 104—116. (In Russian).
3. Gordiyevich T. I., Ruzanov P. V. (2018). Inflation and consumption inequality in 2012—2017. Omsk Scientific Bulletin. Series Society. History. Modernity, No. 4, pp. 87—93. (In Russian). https://doi.org/10.25206/2542-0488-2018-4-87-93
4. Kartaev P. S., Klachkova O. A., Lukianova A. S. (2020). How does inflation influence income inequality in Russia? Voprosy Ekonomiki, No. 4, pp. 54—66. (In Russian). https://doi.org/10.32609/0042-8736-2020-4-54-66
5. Kartaev P. S., Samsonova M. A. (2022). Does income inequality affect inflation in Russia? Voprosy Ekonomiki, No. 10, pp. 5—19. (In Russian). https://doi.org/10.32609/0042-8736-2022-10-5-19
6. Albanesi S. (2007). Inflation and inequality. Journal of Monetary Economics, Vol. 54, No. 4, pp. 1088—1114. https://doi.org/10.1016/j.jmoneco.2006.02.009
7. Al-Marhubi F. (2000). Income inequality and inflation: Тhe cross-country evidence. Contemporary Economic Policy, Vol. 18, No. 4, рр. 428—439. https://doi.org/10.1111/j.1465-7287.2000.tb00039.x
8. Berisha E., Gupta R., Meszaros J. (2020). The impact of macroeconomic factors on income inequality: Evidence from the BRICS. Economic Modelling, Vol. 91, pp. 559—567. https://doi.org/10.1016/j.econmod.2019.12.007
9. Binder С. (2019). Inequality and the inflation tax. Journal of Macroeconomics, Vol. 61, article 103122. https://doi.org/10.1016/j.jmacro.2019.103122
10. Bulírˇ A. (1998). Income inequality: Does inflation matter? IMF Working Paper, No. 7. https://doi.org/10.5089/9781451928549.001
11. Bulírˇ A. (2001). Income inequality: Does inflation matter? IMF Staff Papers, Vol. 48, No. 1, рр. 139—159.
12. Crowe C. (2006). Inflation, inequality, and social conflict. IMF Working Paper, No. 158. https://doi.org/10.5089/9781451864182.001
13. Cysne R. P., Maldonado W. L., Monteiro P. K. (2005). Inflation and income inequality: A shopping-time approach. Journal of Development Economics, Vol. 78, No. 2, pp. 516—528. https://doi.org/10.1016/j.jdeveco.2004.09.002
14. Doepke M., Schneider M. (2006). Inflation and the redistribution of nominal wealth. Journal of Political Economy, Vol. 114, No. 6, pp. 1069—1097. https://doi.org/10.1086/508379
15. Dolmas J., Huffman G., Wynne M. (2000). Inequality, inflation, and central bank independence. Canadian Journal of Economics, Vol. 33, No. 1, pp. 271—287. https://doi.org/10.1111/0008-4085.00015
16. Erosa A., Ventura G. (2002). On inflation as a regressive consumption tax. Journal of Monetary Economics, Vol. 49, No. 4, pp. 761—795. https://doi.org/10.1016/S0304-3932(02)00115-0
17. Ho-Yin Yue, Hang Seng (2011). Income inequality, economic growth and inflation: Study on Korea. International Journal of Economics and Research, Vol. 2, No. 5, pp. 14—21.
18. Maurer M. R., Yesin P. A. (2004). Income inequality and inflation. Conference paper, Swiss National Bank, Study Center Gerzensee. http://growth-distribution.ec.unipi.it/fullT/income_inequality_and_inflation.pdf
19. Menna L., Tirelli P. (2017). Optimal inflation to reduce inequality. Review of Economic Dynamics, Vol. 24, pp. 79—94. https://doi.org/10.1016/j.red.2017.01.004
20. Milanovic B. (1994). Determinants of cross-country income inequality: An “augmented” Kuznets’ hypothesis. World Bank Policy Research Working Paper Series, No. 1246.
21. Monnin P. (2014). Inflation and income inequality in developed economies. CEP Working Paper, No. 2014/1. https://doi.org/10.2139/ssrn.2444710
22. Narob N. (2015). Income inequality and inflation in developing countries: An empirical investigation. Economics Bulletin, Vol. 35, No. 4, pp. 2888—2902.
23. Shahbaz M., Loganathan N., Tiwari A. K. (2015). Financial development and income inequality: Is there any financial Kuznets curve in Iran? Social Indicators Research, Vol. 124, pp. 357—382. https://doi.org/10.1007/s11205-014-0801-9
Supplementary files
Review
For citations:
Arzhenovsky S.V. Inflation and income inequality: Relationship research in the regional aspect. Voprosy Ekonomiki. 2023;(4):151-160. (In Russ.) https://doi.org/10.32609/042-8736-2023-4-151-160
Views:
806
Email this article 
