Stock market development and income inequality
Abstract
Purpose
The purpose of this paper, in contrast to other studies, is to examine an indirect relationship in terms of the effect of income inequality with stock market development in countries South of the Euro-zone during the period 2002-2013.
Design/methodology/approach
The author adopts a new econometric method, the Improved Augmented Regression Method, to obtain bias-reduced and stationary-corrected estimators.
Findings
The results reveal a negative relationship that puts into doubt the recovery of growth.
Originality/value
The new econometric methodology leads to a novel suggested policy on the need for reforms adopting a low-income tax rate system and reinforcement of export-oriented productivity. This conclusion is strengthened by the respective relationship in USA.
Keywords
Acknowledgements
The author thanks an anonymous reviewer for his (or her) extremely helpful comments and suggestions that improved the author’s work significantly.
Citation
Tsagkanos, A. (2017), "Stock market development and income inequality", Journal of Economic Studies, Vol. 44 No. 1, pp. 87-98. https://doi.org/10.1108/JES-08-2015-0155
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited