Financial development and economic inequality
| Principal investigator: | Mgr. Jan Mareš, Ph.D. |
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| Description: | We focus our research on financial development and its impact on economic inequality. While the empirical studies of the relationship exist, we depart from the commonly used approaches in several important ways. First, we primarily concentrate on studying wealth inequality. We believe it captures economic inequality better than traditionally used income inequality. Better data availability and pioneering studies in the field show that approximating economic inequality by income is not ideal. Examining determinants of wealth inequality with a special attention to indicators capturing financial development represents the main contribution of the project. Second, we intend to explore various characteristics of financial institutions, e.g. efficiency of intermediation or access to financial services. Supposedly, these functions should be better captured by other proxy variables than frequently investigated size of the financial markets. In Hasan et al. (forthcoming), we show that suggested financial indicators are far from perfectly correlated and they capture distinct aspects of financial markets. Third, we propose using Bayesian Model Averaging which conveniently addresses model uncertainty caused by numerous theories seeking to explain economic inequality. We are confident that our research could enrich existing literature and bring novel insights for formulation of economic and development policies. |
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| Work in grant: | Finance and Wealth Inequality |
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| End date: | 2018 |
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| Conferences: | 12th International Workshop of Methods in International Finance Network Annual International Conference on Macroeconomics and Finance |
