The Saving-Investment Gap And Income Inequality:Evidence From 16 Countries

Mohsen Bahmani-Oskooee, Scott Hegerty and Harvey Wilmeth ()
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Harvey Wilmeth: University of Wisconsin-Milwaukee, USA

Journal of Developing Areas, 2012, vol. 46, issue 2, 145-158

Abstract: Previous studies that analyzed income inequality mostly concentrated on identifying microeconomic determinants such as income, social factors (family structure, employment, or age distribution), or factor endowments; or such macroeconomic determinants as the exchange rate, economic openness or the black market premium. These studies also relied upon cross-section estimates in their assessments. In this paper, we introduce the "saving-investment" gap, which measures whether the need for financing is unmet, as another determinant of income inequality. We then apply time-series techniques in a study of 16 countries. Using the "bounds testing" cointegration method, in which variables in a given model can be stationary, non-stationary, or a combination of the two, we find varying results across countries. While these results highlight the need for further country-specific research, they indicate the benefits that external financing can provide.

Keywords: Gini Coefficient; Saving-Investment Gap; Bounds Testing; Time Series (search for similar items in EconPapers)
JEL-codes: F41 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.46:year:2012:issue2:pp:145-158

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