What effect does public and private capital have on income inequality? The case of the Latin America and Caribbean region | LAER 31

The effects that the Latin America and Caribbean capital stock (public and private) had on the income inequality levels of 18 countries from this region were analysed, over a peri- od ranging from 1995 to 2017, recurring to an autoregressive distributed lag model in the form of an unrestricted error cor- rection model. The results from the three models that were estimated (with the total capital stock, the public capital stock, and the private capital stock) pointed for the existence of an enhancing effect from the capital stock (public and private) on the income inequality of these countries in the short-run, sug- gesting that the investments were made in the already richer/ wealthiest areas. In the long-run, the effects of capital stock on income inequality seem to vanish, probably due to the efforts to correct the previous detrimental effect. However, the lack of a statistically significant impact shows that, although the ef- forts, capital stock (public and private) still does not contribute to the income inequality reduction, meaning that these coun- tries should improve/change the management and the selec- tion criteria of their physical capital investments to be able to reduce their income gap.

Lee este artículo escrito por Renato Santiago, José Alberto Fuinhas, Matheus Koengkan y António Cardoso Marques aquí

Latin American Economic Review aims to be the leading general interest journal on topics relevant to Latin America. The journal welcomes high-quality theoretical and quantitative papers on economic, social and political-economy issues with a regional focus. Articles presenting new data bases or describing structural reforms within a rigorous theoretical framework will also be considered. A few (illustrative) examples of topics that may be of special interest to this journal include: inflation, informal sector, corruption, crime, drug policy, unions, social exclusion, price controls, energy and environmental policy, natural resources, and technology transfer.