The Relationship between the Inflation Rate and Inequality across US States: A Semiparametric Approach

Mehmet Balcilar, Shinhye Chang (), Rangan Gupta and Stephen Miller
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Shinhye Chang: Department of Economics, University of Pretoria, South Africa

No 201682, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper uses a cross-state panel for the United States over the 1976 to 2007 period to assess the relationship between income inequality and the inflation rate. Employing a semiparametric instrument variable (IV) estimator, we find that the relationship depends on the level of the inflation rate. A positive relationship occurs only if the states exceed a threshold level of inflation rate. Below this value, inflation rate lowers income inequality. The results suggest that a nonlinear relationship exists between income inequality and the inflation rate.

Keywords: Income inequality; Inflation rate; Semiparametric instrumental variable estimator (search for similar items in EconPapers)
JEL-codes: C14 D31 E31 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2016-11
New Economics Papers: this item is included in nep-mac
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Related works:
Journal Article: The relationship between the inflation rate and inequality across U.S. states: a semiparametric approach (2018)
Working Paper: The Relationship between the Inflation Rate and Inequality across U.S. States: A Semiparametric Approach (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201682

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