Capital Openness and Income Inequality: A Cross-Country Study and the Role of CCTs in Latin America

LaGarda, Guillermo; Gallagher, Kevin P.; Linares, Jennifer

doi:10.2139/ssrn.2849463

Cited by 6 publications

(3 citation statements)

References 27 publications

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“…Furthermore, one of the mechanisms discussed earlier suggests that the implementation of financial reforms, which can lead to rising income inequality, may also raise the likelihood of financial crises occurring. (LaGarda et al 2016;Furceri and Loungani 2018).…”

Section: Financial Crisismentioning

confidence: 99%

Financial reforms and income inequality: evidence from developing countries

Gomado¹

2023

WIDER Working Paper

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analysis and policy advice with the aim of promoting sustainable and equitable development. The Institute began operations in 1985 in Helsinki, Finland, as the first research and training centre of the United Nations University. Today it is a unique blend of think tank, research institute, and UN agency-providing a range of services from policy advice to governments as well as freely available original research.The Institute is funded through income from an endowment fund with additional contributions to its work programme from Finland and Sweden, as well as earmarked contributions for specific projects from a variety of donors.

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Section: Financial Crisismentioning

confidence: 99%

Financial reforms and income inequality: evidence from developing countries

Gomado¹

2023

WIDER Working Paper

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“…Capital account openness. By relaxing credit supply constraints, capital openness is expected to reduce income inequality if institutions are strong (LaGarda et al, 2016). In this paper, we use the variable "cap100" of the IMF's Annual Report on Exchange Restrictions to reflect the degree of openness of the capital account.…”

Section: Appendix 1 Explanatory Variables and Their Sourcesmentioning

confidence: 99%

Income Inequality and Education Revisited: Persistence, Endogeneity, and Heterogeneity

Coady

Dizioli

2017

IMF Working Papers

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This paper presents new results on the relationship between income inequality and education expansion-that is, increasing average years of schooling and reducing inequality of schooling. When dynamic panel estimation techniques are used to address issues of persistence and endogeneity, we find a large, positive, statistically significant and stable relationship between inequality of schooling and income inequality, especially in emerging and developing economies and among older age cohorts. The relationship between income inequality and average years of schooling is positive, consistent with constant or increasing returns to additional years of schooling. While this positive relationship is small and not always statistically significant, we find a statistically significant negative relationship with years of schooling of younger cohorts. Statistical tests indicate that our dynamic estimators are consistent and that our identifying instruments are valid. Policy simulations suggest that education expansion will continue to be inequality reducing. This role will diminish as countries develop, but it could be enhanced through a stronger focus on reducing inequality in the quality of education.

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“…The other view supports financial openness, redistributes income, and narrows inequality (Batuo & Asongu, 2015; Kim et al, 2019). LaGarda et al (2017), however, show that openness is not detrimental to income inequality if institutions are strong.…”

Section: Literature Reviewmentioning

confidence: 98%

Financial openness, financial sector development, and income inequality: With an extensive set of pull and push factors

Ashenafi

Dong

2023

African Development Review

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This paper investigates the impact of financial openness on financial sector development and income inequality. We use the de jure and de facto measures of financial openness across 78 countries from 1980 to 2019. By employing a system generalized method of moments (GMM) with 5‐year averaged data and a novel push and pull modeling framework, we obtain three key results. First, the de jure measure of financial openness exacerbates income inequality and is sensitive to banking crises and conflict intensity. Second, the de facto measure spurs stock value traded in emerging market economies (EMEs) and declines domestic credit in Africa. Third, the interaction between de facto measures with schooling and governance factors affects financial sector development and income inequality. We highlighted that the mere usage of the de jure measure and their interaction is incorrect. The key implication is that valuable information about the real impact of openness can be obtained from the de facto measures and their interaction with favorable macroeconomic fundamentals, governance factors, and adverse nonpolicy factors.

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Capital Openness and Income Inequality: A Cross-Country Study and the Role of CCTs in Latin America

Cited by 6 publications

References 27 publications

Financial reforms and income inequality: evidence from developing countries

Financial reforms and income inequality: evidence from developing countries

Income Inequality and Education Revisited: Persistence, Endogeneity, and Heterogeneity

Financial openness, financial sector development, and income inequality: With an extensive set of pull and push factors

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