Impact of Macroeconomic Instability on Income Inequality in South Asian Countries

Authors

  • Muhammad Khalid Mohammad Ali Jinnah University, Block-6, PECHS, Karachi
  • Afaq Ali Khan Mohammad Ali Jinnah University, Block-6, PECHS, Karachi
  • Muhammad Kazim Jafri Mohammad Ali Jinnah University, Block-6, PECHS, Karachi.

Keywords:

Macroeconomic Instability Index, Income Inequality, Gini coefficient, South Asian Countries, Panel Data

Abstract

Purpose:
This paper aims to highlight the impact of economic instability on income inequality in South Asian countries.
Methods:
Panel data analysis have been performed for South Asian countries namely Pakistan, India and Sri-Lanka for the period from 1990 to 2021. Foreign direct investment and labor participation have been used as control variables. The Macroeconomic Instability Index has been calculated by combining unemployment rate, inflation and external balance which is trade
deficit.
Findings:
It was observed that macroeconomic disturbance and foreign direct investment increase income disparity while labor participation rate reduces the inequality.
Novelty of the Study:
The recent economic unrest all around the world increased the significance of this study. To gauge economic instability, an index has been created using geometric mean which was not used in previous studies.

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Published

2024-01-10

Issue

Vol. 3 No. 4 (2023): GISRAS Journal of Management & Islamic Finance (GJMIF)

Section

Articles