Income inequality and macroeconomic activity: A study of the Peruvian case

Abstract

The relationship between income inequality and macroeconomic activity has been extensively investigated for many countries, with mixed evidence over the years. In this context, the aim of the paper is to study this relationship for the Peruvian economy with emphasis on the variables statistical properties. To that end, unit root time series bootstrap simulations are applied, additionally, social and financial variables are used to explain changes in inequality. As a result, no evidence of this relationship is found when variables time series properties are taken into account so new empirical evidence on this issue is critical in light of rising income inequality worldwide and its pervasive effects on society.