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IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION

Year 2008, , 79 - 90, 25.12.2008

İmre Ersoy Bilgehan Baykal Pınar Deniz

https://doi.org/10.29228/mjes.165

Abstract

The article investigates the relationship between ECB 's monetary policy, SGP constrained fiscal policies of EMU members, the growth levels and the members' social development pattern embodied as income distribution. Panel co integration analysis is employed for the period between 1999 and 2008 in search for the impact of economic and monetary unification of the first 12 EMU members on the increasing income inequality. The results of the empirical analysis show that both the monetary policy of ECB and the restrained fiscal policies of the EMU members have negative effects on income equality. The findings also suggest that growth has positive effect on income distribution but the pace ofGDP growth is declining in EMU.

Keywords: Monetary Policy, Fiscal Policy, Income Distribution, Models with Panel Data

Keywords

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References

  • Bourguignon, F., & Verdier, T. (2000). Oligarchy, democracy, inequality and growth. Journal of Development Economics, 62, 285-313.
  • Bulir, A., & Guide, A.-M. (1995). Inflation and Income Distribution: Further Evidence on Empirical Links. International Monetary Fund Working Paper, No. 95/86. Retrieved: September 17, 2008, from http://papers.ssm.com/sol3/papers.cfm?abstract_id=883233
  • Cordoba, J. C., & Verdier, G. (2008). Inequality and growth: Some welfare calculations. Journal of Economic Dynamics & Control, 32, 1812-1829.
  • Deininger, K., & Squire, L. (1996). Measuring income inequality: a new data-base. World Bank Economic Review, 10, 565-591.
  • Deininger, K., & Squire, L. (1998). New ways of looking at old issues: inequality and growth. Journal of Development Economics, 57,259-287.
  • Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115, 53-74.
  • Keefer, P., & Knack, S. (1999). Polarization, Politics, and Property Rights: Links between Inequality and Growth. World Bank Policy Research Working Paper No. 2418. Retrieved: September 18, 2008, from http:/ /ssm.corn/abstract=632489
  • Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, 45, 1-28.
  • Li, H., Xie, D., & Zou, H.-F. (2000). Dynamics oflncome Distribution. The Canadian Journal of Economics, 33, 937-961.
  • Lucas, R. E. (2004). The industrial revolution: past and future. The Region, 18, 5-20. Retrieved: September 24, 2008, from http:/ /minneapolisfed.org/pubs/region/04-05/essay .cfm
  • Moran, T. P. (2005). Kuznets's Inverted U-Curve Hypothesis: The Rise, Demise, and Continued Relevance of a Socioeconomic Law. Sociological Forum, 20, 209-244.
  • Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and Statistics, Special Issue, 653-670.
  • Pedroni, P. (2000). Fully Modified OLS for Heterogeneous co integrated Panels. Nonstationary Panels, Panel Cointegration and Dynamic Panels, 15, 93-130.
  • Perotti, R. (1996). Growth, income distribution and democracy: what the data say. Journal of Economic Growth, 1, 149-187.
  • Phillips, P. C. B., & Hansen, B. E. (1990). Statistical inference in instrumental regressions with 1(1) processes. Review of Economic Studies, 57, 99-125.
  • Pryor, F. L. (2007). The anatomy of increasing inequality of U.S. family incomes. The Journal of Socio-Economics, 36, 595-618.
  • Romer, C. D., & Romer, D. H. (1998). Monetary Policy And The WellBeing Of The Poor. NBER Working Paper No. W6793. Retrieved: September 20, 2008, from http://ssm.com/abstract=139571
  • Weede, E. (1997). Income inequality, democracy and grow reconsidered. European Journal of Political Economy, 13, 751-764.

IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION

Year 2008, , 79 - 90, 25.12.2008

İmre Ersoy Bilgehan Baykal Pınar Deniz

https://doi.org/10.29228/mjes.165

Abstract

The article investigates the relationship between ECB 's monetary policy,
SGP constrained fiscal policies of EMU members, the growth levels and the
members' social development pattern embodied as income distribution.
Panel co integration analysis is employed for the period between 1999 and
2008 in search for the impact of economic and monetary unification of the
first 12 EMU members on the increasing income inequality. The results of
the empirical analysis show that both the monetary policy of ECB and the
restrained fiscal policies of the EMU members have negative effects on
income equality. The findings also suggest that growth has positive effect on
income distribution but the pace ofGDP growth is declining in EMU.

Keywords

Monetary Policy Fiscal Policy Income Distribution Models with Panel Data

References

  • Bourguignon, F., & Verdier, T. (2000). Oligarchy, democracy, inequality and growth. Journal of Development Economics, 62, 285-313.
  • Bulir, A., & Guide, A.-M. (1995). Inflation and Income Distribution: Further Evidence on Empirical Links. International Monetary Fund Working Paper, No. 95/86. Retrieved: September 17, 2008, from http://papers.ssm.com/sol3/papers.cfm?abstract_id=883233
  • Cordoba, J. C., & Verdier, G. (2008). Inequality and growth: Some welfare calculations. Journal of Economic Dynamics & Control, 32, 1812-1829.
  • Deininger, K., & Squire, L. (1996). Measuring income inequality: a new data-base. World Bank Economic Review, 10, 565-591.
  • Deininger, K., & Squire, L. (1998). New ways of looking at old issues: inequality and growth. Journal of Development Economics, 57,259-287.
  • Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115, 53-74.
  • Keefer, P., & Knack, S. (1999). Polarization, Politics, and Property Rights: Links between Inequality and Growth. World Bank Policy Research Working Paper No. 2418. Retrieved: September 18, 2008, from http:/ /ssm.corn/abstract=632489
  • Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, 45, 1-28.
  • Li, H., Xie, D., & Zou, H.-F. (2000). Dynamics oflncome Distribution. The Canadian Journal of Economics, 33, 937-961.
  • Lucas, R. E. (2004). The industrial revolution: past and future. The Region, 18, 5-20. Retrieved: September 24, 2008, from http:/ /minneapolisfed.org/pubs/region/04-05/essay .cfm
  • Moran, T. P. (2005). Kuznets's Inverted U-Curve Hypothesis: The Rise, Demise, and Continued Relevance of a Socioeconomic Law. Sociological Forum, 20, 209-244.
  • Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and Statistics, Special Issue, 653-670.
  • Pedroni, P. (2000). Fully Modified OLS for Heterogeneous co integrated Panels. Nonstationary Panels, Panel Cointegration and Dynamic Panels, 15, 93-130.
  • Perotti, R. (1996). Growth, income distribution and democracy: what the data say. Journal of Economic Growth, 1, 149-187.
  • Phillips, P. C. B., & Hansen, B. E. (1990). Statistical inference in instrumental regressions with 1(1) processes. Review of Economic Studies, 57, 99-125.
  • Pryor, F. L. (2007). The anatomy of increasing inequality of U.S. family incomes. The Journal of Socio-Economics, 36, 595-618.
  • Romer, C. D., & Romer, D. H. (1998). Monetary Policy And The WellBeing Of The Poor. NBER Working Paper No. W6793. Retrieved: September 20, 2008, from http://ssm.com/abstract=139571
  • Weede, E. (1997). Income inequality, democracy and grow reconsidered. European Journal of Political Economy, 13, 751-764.
There are 18 citations in total.

Details

Primary Language English
Journal Section Makaleler
Authors

İmre Ersoy This is me

Bilgehan Baykal This is me

Pınar Deniz This is me

Publication Date December 25, 2008
Published in Issue Year 2008

Cite

APA Ersoy, İ., Baykal, B., & Deniz, P. (2008). IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION. Marmara Üniversitesi Avrupa Araştırmaları Enstitüsü Avrupa Araştırmaları Dergisi, 16(1&2), 79-90. https://doi.org/10.29228/mjes.165
AMA Ersoy İ, Baykal B, Deniz P. IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION. MJES. December 2008;16(1&2):79-90. doi:10.29228/mjes.165
Chicago Ersoy, İmre, Bilgehan Baykal, and Pınar Deniz. “IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION”. Marmara Üniversitesi Avrupa Araştırmaları Enstitüsü Avrupa Araştırmaları Dergisi 16, no. 1&2 (December 2008): 79-90. https://doi.org/10.29228/mjes.165.
EndNote Ersoy İ, Baykal B, Deniz P (December 1, 2008) IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION. Marmara Üniversitesi Avrupa Araştırmaları Enstitüsü Avrupa Araştırmaları Dergisi 16 1&2 79–90.
IEEE İ. Ersoy, B. Baykal, and P. Deniz, “IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION”, MJES, vol. 16, no. 1 & 2, pp. 79–90, 2008, doi: 10.29228/mjes.165.
ISNAD Ersoy, İmre et al. “IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION”. Marmara Üniversitesi Avrupa Araştırmaları Enstitüsü Avrupa Araştırmaları Dergisi 16/1 & 2 (December 2008), 79-90. https://doi.org/10.29228/mjes.165.
JAMA Ersoy İ, Baykal B, Deniz P. IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION. MJES. 2008;16:79–90.
MLA Ersoy, İmre et al. “IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION”. Marmara Üniversitesi Avrupa Araştırmaları Enstitüsü Avrupa Araştırmaları Dergisi, vol. 16, no. 1&2, 2008, pp. 79-90, doi:10.29228/mjes.165.
Vancouver Ersoy İ, Baykal B, Deniz P. IMPACT OF MONETARY AND FISCAL POLICIES ON INCOME INEQUALITY IN EUROPEAN MONETARY UNION. MJES. 2008;16(1&2):79-90.