Inflation and income inequality in a Schumpeterian economy with heterogeneous wealth and skills

Zheng, Zhijie; Wan, Xi; Huang, Chien‐Yu

doi:10.1016/j.econmod.2023.106193

Cited by 9 publications

(7 citation statements)

References 54 publications

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“…Secondly, the weight of residence consumption has stably stayed 10%-16% in segments I and II, while risen up to nearly 20% in segment III, which shows that residence consumption has become a considerably large proportion of household consumption. Given that rental price is a consumption category mostly concerned by the middle-income group, it implies that the proportion of China's middle-income group has significantly risen as well, which also coincides with the conclusion from Zheng et al (2023).…”

supporting

confidence: 73%

“…Thus, different income groups will pay closer attention to sectoral CPI fluctuations in the categories of their major consumption than to trending changes in the overall CPI (Kim & Lim, 2022;Giri, 2022). For example, Zheng et al (2023) and Afonso and Sequeira (2023) propose that the low-income group is largely concerned with price fluctuations in the food category; the middle-income group pays closer attention to price fluctuations in the residence category; the high-income group focuses on price fluctuations in the categories of education and recreation to a greater extent. The situation is more complicated in China.…”

mentioning

confidence: 99%

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Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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China’s constantly rapid economic growth accompanying by a low overall inflation has long been mysterious in macroeconomics. The core purpose of this paper is to solve this puzzle. Therefore, we integrate overdetermined set of equations into a MUCSVO model to explore the volatility mechanism of the overall inflation from a sectoral perspective. Our key findings include: 1) the hedging effect of sectoral inflation fluctuations principally accounts for China’s long-run stable overall inflation; 2) the main contradiction of China’s inflation has been shifting from high price levels in the traditional food and residence categories to rising prices in the health care category; 3) as the proportions of inflation in the food and residence categories fall steadily, sectoral inflation weights become more evenly distributed. In conclusion, China’s overall inflation and deflation will be much less likely to occur, while inflation is still of sectoral imbalance. Unusual price fluctuations in the food and health care categories, which are highly relevant to basic living standards of the low-income group, deserve close attention in particular. Overall, besides solving the puzzle of China’s low inflation, our model is applicable to economies that do not publish inflation weights, which is a useful extension of core inflation measurement.

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supporting

confidence: 73%

mentioning

confidence: 99%

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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“…Inflation reduces the purchasing power of currency, which can disproportionately affect individuals with lower incomes. See Zheng et al (2023) for similar empirical outcome.…”

Section: Baseline Resultsmentioning

confidence: 75%

“…Similarly, we also introduce inflation (consumer price index) in our empirical model. Inflation may reduce the purchasing power of the consumers and therefore affect income distribution (Zheng et al, 2023). We also introduced government spending (government expenditure % of GDP) in our model-the intuition behind introducing this variable is because government's fiscal activity in the form of investment in education, health, infrastructure, and social programs is capable of reducing income inequality (Sidek, 2021).…”

Section: Datamentioning

confidence: 99%

International Portfolio Investment, Institutional Quality, and Income Inequality: Evidence from Global Sample

Arogundade,

Yeboua,

Mdud

2023

Preprint

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This study examines the effect of total portfolio investment and its sub-categories (debt and equity) on income inequality using a sample of 76 countries. The empirical results show that foreign portfolio flows worsen income inequality in recipient countries, regardless of the inequality indicators used. The study also digs deeper to examine the conditions under which international portfolio investment can have an inequality-reducing effect. The empirical evidence confirms our hunch that FPI, in the presence of good institutions, serves as a catalyst for bridging the gap between the rich and poor. In other words, domestic factors such as the quality of institutions modulate the link between portfolio investment flows and income inequality. The estimated results are reassuringly robust to alternative measures of inequality (Gini-index and Palma ratio), sub-categories of total portfolio investment (debt and equity), and various estimators such as IV-2SLS, Machado and Silva quantile regression, and JKS Granger non-causality results. JEL classification: F3; P0; I30

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“…By investigating how each of these elements contributes, individually and collectively, to income disparity, this investigation intends to fill an important vacuum in the existing research. Zheng, Wan, and Huang (2023) investigate the impact of monetary policy on innovation and income inequality. According to the findings of the study, inflation unquestionably has a negative influence on economic development and innovation, whereas its effect on income disparity may be positive, negative, or even U-shaped.…”

Section: Introductionmentioning

confidence: 99%

Trade Liberalization, Education, Inflation, FDI, and Urbanization: Implications for Income Inequality in the Developing World

Bashir,

Munir,

Ali

et al. 2023

iRASD J. Eco.

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The purpose of the present study is to analyze the influence of Trade openness, Expenditure in education, inflation, FDI, Household consumption expenditure, and urbanization on Income Inequality of some selected developing countries from 2006 to 2022. After collecting panel data of some selected developing economies from World Development Indicators, Im, Pesaran & Shin (IPS) – panel unit root test has been applied to check stationary levels of variables. Then, the panel ARDL technique was applied to the selected data after confirming the mixed order of integration (using IPS) of selected variables and the findings suggest that Income Inequality is significantly increased by Urbanization, Trade Openness, Inflation, and household consumption Expenditure while Expenditure in Education and Capital Formation significantly reduce Income Inequality in developing countries.

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Inflation and income inequality in a Schumpeterian economy with heterogeneous wealth and skills

Cited by 9 publications

References 54 publications

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

International Portfolio Investment, Institutional Quality, and Income Inequality: Evidence from Global Sample

Trade Liberalization, Education, Inflation, FDI, and Urbanization: Implications for Income Inequality in the Developing World

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