Central bank independence, income inequality and poverty: What do the data say?

Jan-Egbert Sturm (), Cristina Bodea, Jakob de Haan and Raymond Hicks
Additional contact information
Jan-Egbert Sturm: KOF Swiss Economic Institute, ETH Zurich
Cristina Bodea: Michigan State University
Raymond Hicks: Columbia University

The Journal of Economic Inequality, 2025, vol. 23, issue 1, No 10, 227-246

Abstract: Abstract This paper examines whether the independence of central banks is related to income inequality and poverty. Following the 2008 financial crisis, independent central banks have been criticized that their actions contribute to an unequal income distribution. Yet, the case can also be made that such independence is orthogonal to income inequality or can even help mitigate it. As proxies for inequality, we employ five-year averages of the Gini coefficient and the poverty gap. Our database consists of a large set of countries, covering a long period. Our fixed effects panel estimates suggest that—despite many claims to the contrary—there is neither a robust relationship between central bank independence and the Gini coefficient nor between independence and the poverty gap. Several robustness checks (using alternative proxies for income inequality and central bank independence, interaction effects, quantile and cross-section regressions) confirm our finding.

Keywords: Income inequality; Poverty gap; Central bank independence (search for similar items in EconPapers)
JEL-codes: E58 I32 O16 (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10888-024-09637-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joecin:v:23:y:2025:i:1:d:10.1007_s10888-024-09637-6

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10888

DOI: 10.1007/s10888-024-09637-6

Access Statistics for this article

The Journal of Economic Inequality is currently edited by Stephen Jenkins

More articles in The Journal of Economic Inequality from Springer, Society for the Study of Economic Inequality Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().