Template-Type: ReDIF-Paper 1.0
Author-Name: Montes Rojas Gabriel
Author-Name-First: Gabriel
Author-Name-Last: Montes Rojas
Author-Name: Carrera Jorge
Author-Name-First: Jorge
Author-Name-Last: Carrera
Author-Name: Panigo Demián
Author-Name-First: Demián
Author-Name-Last: Panigo
Author-Name: Solla Mariquena
Author-Name-First: Mariquena
Author-Name-Last: Solla
Author-Name: Toledo Fernando
Author-Name-First: Fernando
Author-Name-Last: Toledo
Title: Income Inequality and External Wealth of Nations
Abstract: We study the relationship between income inequality and external wealth using dynamic panel data models with annual observations of 88 emerging and developing economies for the period 1970-2020. We find evidence in favor of a significant and positive association between inequality indicators and net external wealth. This relationship is statistically significant for all income inequality measures and net external wealth variables. If the Top 1 of the richest individuals in a given country increments their share by 1 percentage point this will produce an average same-year increment in net foreign assets of 0.45% in terms of the country’s GDP. The long-run effect is more than double in magnitude (1.05% of GDP). For the Top 10, the long-run effect increases tenfold (11.6% of GDP). When disaggregated into foreign assets and liabilities, we find a heterogeneous behavior of the financial elites. These findings reveal that financialized elites have a greater propensity to accumulate external wealth than the rest of the population.
Length:  18 pages
Creation-Date:  2023-11
File-URL: https://aaep.org.ar/works/works2023/4675.pdf
File-Format: Application/pdf
Number: 4675
Classification-JEL: O15, E21
Handle: RePEc:aep:anales:4675