GLOBALIZATION, GROWTH AND INEQUALITY: TESTING CAUSALITY AND ASYMMETRIES
GLOBALIZATION, GROWTH AND INEQUALITY: TESTING CAUSALITY AND ASYMMETRIES

Summary/Abstract: Interest about income distribution and inequality have substantially grown in recent years. First of all, it can be explained by the increase in inequality as a major threat for the stability of society and economy, that often try to associate with the consequences of the globalization process and slowdown in the global economy. Hence the need for research and constructive discussions on inequality, and its causes. As hypotheses, as a rule, statements are tested: economic growth leads first to an increase, and then to a decrease in inequality; high income differentiation stimulates higher growth rates; the processes of globalization contribute to reducing inequalities in the world. The aim of the empirical part of submitted research is to analyse the relationships between income inequality and economic growth, income inequalityand globalisation. The choice of methods to confirm the assumptions was determined by the properties of the long-term relationship between time series of indicators. Study has employed a single-country regression to investigate the existence of the Kuznets curve hypothesis for the Ukraine economy over the period 1995-2016. The bounds testing (ARDL) approach to cointegration is applied to examine the long-run relationship between income inequality and economic growth. The results, when regressing Gini index and GDP per capita based on purchasing power parity, confirm the presence of hidden cointegration. The Granger causality test was applied in order to test the existence of a causal relationship between the degree of globalization and income inequality. For case of Ukraine there is relationship between globalization process and inequality in the long run. Also the causality test revealed some cyclicality, in other words, there is the interchange of one-way direction of causality

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