A Refinement of the Relationship Between Central Bank Independence, Inflation, and Income Inequality in Developing Countries

Abstract

This paper analyzes the impact on income inequality of a set of variables usually considered in the growth literature as potential growth determinants. There is evidence to suggest that unemployment and inflation are positively associated with income inequality; except for countries with central bank independence where a negative association exists between inflation and income inequality. The empirical evidence shows that income inequality increases when unemployment increases.