Impact of Financial Liberalization on Income Inequality: A PVAR Approach

Chokri Zehri^1, and Hamadi Ben Abid²

¹Assistant Professor of Economics, Albaha International College of Sciences, Saudi Arabia

²Assistant Professor of Quantitative Methods, Albaha International College of Sciences, Saudi Arabia

Cite this paper:
Chokri Zehri and Hamadi Ben Abid. Impact of Financial Liberalization on Income Inequality: A PVAR Approach. International Journal of Econometrics and Financial Management. 2019; 7(1):1-11. doi: 10.12691/ijefm-7-1-1

Abstract

We estimate a panel vector autoregressive model (PVAR) to study the impact of financial liberalization on income inequality. The analysis is carried out for 162 countries over the period 1980-2015. The results show that capital account liberalization and financial development increase inequality. However, it change according to the category of income countries (low, middle and high-income) and according to the period of study used (before and after 1990). The shocks caused by the indicators of financial liberalization on income inequality are very low but persistent in time.

Keywords:
financial liberalization income inequality PVAR

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