Exchange rate pass-through to import prices in South Africa: Is there asymmetry?

20 September 2012
Publication Type: Working Paper
JEL Code: D31, E44, O11, O54

We examine the impact of financial development on earnings inequality in Brazil in the 1980s and first half of the 1990s. The evidence – based on panel time-series data and analysis – shows that financial development had a significant and robust effect in reducing inequality during the period. We suggest that this is not only because the poorer can invest the acquired credit in either short or long-term productive activities, but also because those with access to financial markets can insulate themselves, via a process of financial adaptation, against recurrent poor macroeconomic performance, which is exemplified in Brazil by high rates of inflation. The main implication of the results is that a deeper and more active financial sector alleviates the high inequality seen in Brazil without the need for distortionary taxation.

Series title: Working Paper 086
1 July 2008
Journal: 2008, The Developing Economies, 47 (1), 30-52
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