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On the Persistence of Cross‐Country Inequality Measures
Author(s) -
CHRISTOPOULOS DIMITRIS,
MCADAM PETER
Publication year - 2017
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12374
Subject(s) - unit root , inequality , econometrics , economics , persistence (discontinuity) , unit root test , gini coefficient , economic inequality , index (typography) , panel data , mathematics , demographic economics , cointegration , computer science , mathematical analysis , geotechnical engineering , world wide web , engineering
We examine inequality persistence in a multicountry unbalanced panel using a battery of stationarity and long‐run memory tests. Inequality is measured by the Gini indices of income inequality. Results suggest that we cannot reject a unit root in inequality measures. This applies to both gross and net indices: thus while redistributive measures have reduced the level of inequality, they have not sufficiently modified its apparent unit root. A more likely conclusion is that inequality measures are exceptionally persistent if not strictly a unit root. We also introduce a new panel stationarity test useful for series subject to unknown structural breaks.