The Role of Financial Development in the Relationship Between Income Inequality and Economic Growth: Evidence from Method of Moments Quantile Regression

Öz

This study sheds light on the linear and nonlinear relationship between financial development level and income inequality across 79 countries within a period of 1995 to 2016. To test this relationship panel the Method of Moments Quantile Regression (MMQR), which was recently published by Machado and Silva (2019), has been employed. Besides Pedroni and GUV cointegration tests, FMOLS and DOLS have been administered. Although traditional mean estimators can explain the heterogonous nature of analysed countries, since their results depend on conditional mean they fall short in making the responses heterogonous. In that sense, the effects of specific factors such as financial and economic developments which also impact income inequality have been inspected via MMQR, which also takes into account certain econometric difficulties such as heterogeneity and endogeneity in various quantiles. Compared to other methods, another advantage of MMQR is that by providing information on how explanatory variables can influence the entire conditional distribution, it allows the use of methods only valid in the estimation of conditional means, such as difficulty in noticing heterogeneity and endogeneity problems in panel data models. According to the results obtained from the MMQR model, Greenwood and Jovanovic’s (1990) inverted U hypothesis was accepted only in countries with an inequality income distribution between financial development and income inequality, whereas in counties with equal income distribution the income inequality widening hypothesis was confirmed. According to Panel FMOLS and Panel DOLS and also coefficient estimations, Greenwood and Jovanovic (1990)’s inverted U hypothesis was confirmed in the relationship between financial development and income.

Anahtar Kelimeler

• Financial development
• Income inequality
• Kuznets Curve

Gelir Eşitsizliği ve Ekonomik Büyüme Arasındaki İlişkide Finansal Gelişmenin Rolü: Moment Kantil Regresyon Yönteminden Bulgular

Öz

Bu çalışma finansal gelişmişlik düzeyi ile gelir arasındaki doğrusal ve doğrusal olmayan ilişkiyi 79 ülkede 1995-2016 yılları arasında incelemektedir. Bu ilişkiyi test etmek için literatüre Machado ve Silva (2019) tarafından tanıtılan panel Moment Kantil Regresyon Yöntemi (MMQR) ile Pedroni ve GUV eşbütünleşme testleri, FMOLS ve DOLS kullanılmıştır. Geleneksel ortalama tahmin ediciler, ele alınan ülkelerin heterojen doğasını açıklasalar da sonuçları koşullu ortalamaya dayalı olduğundan yanıtların heterojen olmasını sağlayamazlar. Bu amaçla, gelir eşitsizliğini etkileyen finansal ve ekonomik kalkınma gibi faktörlerin etkisi çeşitli kantillerde heterojenlik ve içsellik gibi ekonometrik zorlukları da dikkate alan MMQR yöntemi ile analiz edilmiştir. MMQR’ in diğer yöntemlere göre avantajı ise, açıklayıcı değişkenlerin tüm koşullu dağılımı nasıl etkilediği bilgisini sağlayarak, panel veri modellerinde heterojenlik ve içsellik problemlerini dikkate alma zorluğu gibi sadece koşullu ortalamaların tahmininde geçerli olan metotları kullanmasına izin vermesidir. MMQR model sonuçlarına göre finansal kalkınma ile gelir eşitsizliği arasında yalnızca gelir dağılımı eşit olmayan ülkelerde Greenwood ve Jovanovic (1990)’in ters U hipotezi kabul edilmişken, eşit gelir dağılıma sahip ülkelerde ise gelir eşitsizliğini genişletici hipotez doğrulanmıştır. Panel FMOLS ve Panel DOLS ile katsayılar tahminlerine göre finansal gelişme ile gelir arasındaki ilişkide Greenwood ve Jovanovic (1990)’nin ters U hipotezini desteklemektedir.

Anahtar Kelimeler

• Finansal Gelişmişlik
• Gelir Eşitsizliği
• Kuznet Eğrisi

Kaynakça

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