The Effect of Financial Development on Income Inequality in the Iran’s Economy Using Nonlinear Cointegration Technique, By Abdolkarim Hosseinpoor

Research

Title	The Effect of Financial Development on Income Inequality in the Iran’s Economy Using Nonlinear Cointegration Technique
Type	Article
Keywords	Keywords: Financial Markets, Income Inequality, TVECM, Nonlinear Cointegration, Iran’s Economy
Journal	International Journal of Management, Accounting and Economics
DOI	—
Researchers	Abdolkarim Hosseinpoor (Second researcher) , Ebrahim Anwari (Third researcher)

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.