Inequality, the Price of Nontradables, and the Real Exchange Rate : Theory and Cross-Country Evidence

Min, Hong-Ghi

World Bank, Washington, DC

关键词: BUDGET CONSTRAINT;    CAPITAL INFLOWS;    CD;    CENTRAL BANK;    COUNTRY DUMMY;   

DOI  :  10.1596/1813-9450-2758
RP-ID  :  WPS2758

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The author provides theoretical andempirical evidence of a negative association between incomeinequality and real exchange rates. First, he builds atheoretical model showing the transmission mechanism frominequality to real exchange rates. Second, usingcross-country data, he demonstrates that the theoreticalargument has empirical support. The association is large,significant, and robust to alternative specifications of thereduced form model and estimation methodologies. Thesefindings provide empirical support for Poverty ReductionStrategy Papers, government strategies agreed on with theWorld Bank that hinge on four major objectives: acceleratingequity-based growth, guaranteeing access to basic socialservices for the poor, expanding opportunities foremployment and income-generating activities for the poor,and promoting good governance. The author's analysisindicates that "equity-based growth" and"export-driven growth" are compatible policygoals. But the negative relationship between inequality andreal exchange rates does not imply that policies aimed atdramatic redistribution will automatically lead to realdepreciation of the domestic currency, improve the externalbalance, and accelerate economic growth.