The Effect of Financial Development on Income Inequality in the Iran's Economy Using Non-linear Cointegration Technique
Year: 2025
Type: article
Abstract: Different theories have different predictions about the relationship between financial development and income inequality that leads to two broad categories of thought with two conflicting theoretical hypotheses. This study examines the effect of financial development on income inequality in the Iran’s economy by using a Threshold Error Correction Model (TVECM) form 1971 to 2013. The results of TVAR.LR test show that the model has only one threshold. The results of the TVECM.Seo and TVECM.HS tests represent a threshold cointegration between the variables. Also, the results of Threshold Error Correction equation indicate that before reaching the threshold value, an increase in financial development causes increases in the Gini coefficient. But after reaching the threshold value, financial development reduces income inequality (decreases Gini coefficient) in the Iran’s economy.
Authors: Zarranejhad, Mansour, Hosseinpoor, Abdolkarim, Anvari, Ebrahim
Institutions: Shahid Chamran University of Ahvaz, Persian Gulf University
Language: English
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
SDG: Reduced inequalities
Open Access status: green
OpenAlex ID: W7093077136
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