Does Income Inequality Affect Capital Flows? Evidence from Emerging Markets and Developing Economies

Jorge Carrera (), Gabriel Montes-Rojas (), Mariquena Solla () and Fernando Toledo ()
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Jorge Carrera: Banco Central de la República Argentina (BCRA). Buenos Aires, Argentina.
Mariquena Solla: Universidad Nacional de La Plata (UNLP). La Plata, Argentina.
Fernando Toledo: Universidad Nacional de La Plata (UNLP). La Plata, Argentina.

No 2023-86, Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) from Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET)

Abstract: We evaluate the effect of income inequality on capital flows. We distinguish between inflows and outflows of aggregate capital (accumulation of external liabilities and assets) and disaggregated public and private capital flows. Using dynamic panel data models for a sample of emerging markets and developing economies during 1999–2019, we find that the top 1 and 10 income shares are positive and significant for aggregate and private inflows, while the disposable Gini index is only significant for one specification. Financial openness amplifies these effects.

Keywords: Income Inequality; Capital Flows; Financial Openness; Panel Data Models (search for similar items in EconPapers)
JEL-codes: C23 D31 F21 F32 F41 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2023-10
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Working Paper: Does Income Inequality Affect Capital Flows? Evidence from Emerging Markets and Developing Economies (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ake:iiepdt:2023-86

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