The Dynamic Effects of Urban–Rural Income Inequality on Sustainable Economic Growth under Urbanization and Monetary Policy in China
Sustainability
; 14(11):6896, 2022.
Article
in English
| ProQuest Central | ID: covidwho-1892988
ABSTRACT
Income inequality in China has become increasingly serious since the beginning of the economic reform period in the 1970s, with urban–rural income inequality playing a large role. Urbanization policy and monetary policy are currently important economic policy tools for the Chinese government. In order to investigate the influence of inequality on the economy and to provide recommendations for ensuring the sustainability of growth, we study the effect of urban–rural income inequality on economic growth in the context of urbanization and monetary policy in China between 2002 and 2021. Using a flexible time-varying parametric structural vector auto-regression (TVP-VAR) model and a robust Markov chain Monte Carlo (MCMC) algorithm, our empirical results show that the effect is time-varying, with inequality promoting growth in the early years but affecting it adversely at later stages. Currently, urbanization mitigates inequality and promotes growth simultaneously, while easy monetary policy worsens inequality and affects growth adversely in the long term. We suggest that the authorities need to consider the implementation of policy rebalancing to ensure that the sustainability of economic development is not jeopardized because of worsening income disparity. Proactive urbanization policy and prudent monetary policy are viable rebalancing options.
Environmental Studies; income inequality; economic growth; urbanization; monetary policy; TVP-VAR model; policy rebalancing; Markov chains; Regression models; Economic reform; Economic development; Sustainability; Central banks; Economics; Wages & salaries; COVID-19; Sustainable development; Income; Pandemics; Income distribution; Socioeconomics; Algorithms; Gross Domestic Product--GDP; Rural areas; Robustness (mathematics); Coronaviruses; Economic policy; Households; United States--US; China
Full text:
Available
Collection:
Databases of international organizations
Database:
ProQuest Central
Type of study:
Experimental Studies
Language:
English
Journal:
Sustainability
Year:
2022
Document Type:
Article
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