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Does Price Stability Impact the Link Between Income Inequality and Consumption Inequality?

  • Eliphas Ndou
  • Thabo Mokoena
Chapter

Abstract

Evidence reveals that consumption inequality rises significantly to positive income inequality shocks. A counterfactual VAR analysis indicates that high inflation amplifies the increase in consumption inequality to positive income inequality shocks when inflation exceeds the 6 % threshold. In addition, evidence reveals that low inflation dampens the increase in consumption inequality when inflation is below the 6 % threshold. This evidence reveals that price stability matters. Therefore, policymakers should enforce price stability to weaken the link between the income inequality and consumption inequality.

References

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Eliphas Ndou
    • 1
    • 3
    • 4
  • Thabo Mokoena
    • 2
  1. 1.Economic Research DepartmentSouth African Reserve BankPretoriaSouth Africa
  2. 2.Department of Economic, Small Business Development, Tourism and Environmental AffairsFree State Provincial GovernmentBloemfonteinSouth Africa
  3. 3.School of Economic and Business SciencesUniversity of the WitwatersrandJohannesburgSouth Africa
  4. 4.Wits Plus, Centre for Part-Time StudiesUniversity of the WitwatersrandJohannesburgSouth Africa

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