Abstract
This paper mainly concentrates on examining the impact of monetary policy on income inequality in Vietnam from 2001 to 2014. In our study, monetary policy shock is represented by the difference between the real and targeted growth rates of money supply of the State Bank of Vietnam (SBV), while income inequality is measured by Gini coefficients. The results of VAR model show that monetary policy has a small and lagged effect on income inequality. Besides monetary policy, inflation, education and unemployment are also found to have significant impact on income inequality, while economic growth has insignificant effect on this variable. Based on these findings, we suggest that the SBV should pay more attention at the inequality consequences caused by its monetary policy.
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Gini coefficient is the ratio of the area between the actual income distribution curve and the line of perfect income equality over the total area under the line of perfect income equality. Formally, let \(x_i\) be a point on the x-axis, and \(y_i\) a point on the y-axis, then \(Gini=1-\displaystyle \sum _{i=1}^N(x_i-x_{i-1})(y_i+y_{i-1})\). When there are N equal intervals on the x-axis, then \(Gini=1-\dfrac{1}{N}\displaystyle \sum _{i=1}^N(y_i+y_{i-1})\).
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Nguyen, N.T., Vu, H.N., Le, T.H. (2019). Impacts of Monetary Policy on Inequality: The Case of Vietnam. In: Kreinovich, V., Thach, N., Trung, N., Van Thanh, D. (eds) Beyond Traditional Probabilistic Methods in Economics. ECONVN 2019. Studies in Computational Intelligence, vol 809. Springer, Cham. https://doi.org/10.1007/978-3-030-04200-4_34
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