The Kuznets Curve Hypothesis Checked Out on Up-To-Date Observations in African Countries

The purpose of this article is to study empirically whether the Kuznets’ curve hypothesis on inequality and development is present in the economies located in Africa, as well as whether there is a minimum income for this hypothesis to begin to be fulfilled. In order to study this question, a panel of data from 45 countries is available for the period 1975–2019, and these data are analysed through a graphical point of view and through an econometric analysis using the pooled mean group estimator. The results obtained allow us to conclude that there is evidence in favour of Kuznets’ hypothesis and that a minimum level of income is required for it to be significantly observed. As well as the fact that today there is still a palpable heritage of European colonization. JEL Classification: D63, O10, O11.

DYNAMIC RELATIONSHIP BETWEEN INFLATION AND FINANCIAL DEVELOPMENT

This paper studies the long- and short-run relationships between inflation and financial development. Applying the Pooled Mean Group estimator of Pesaran, Shin, and Smith (1999, Journal of the American Statistical Association 94, 621–634) to unbalanced panel data for 87 countries over the period 1960–2005, we find that a negative long-run relationship between inflation and financial development coexists with a positive short-run relationship. However, when the data are split into different income or inflation groups, these results can be observed only in low-income or low-inflation economies.

Estimation of Nonstationary Heterogeneous Panels

We introduce a new Stata command, xtpmg, for estimating nonstationary heterogeneous panels in which the number of groups and number of time-series observations are both large. Based on recent advances in the nonstationary panel literature, xtpmg provides three alternative estimators: a traditional fixed-effects estimator, the mean-group estimator of Pesaran and Smith (Estimating long-run relationships from dynamic heterogeneous panels, Journal of Econometrics 68: 79–113), and the pooled mean-group estimator of Pesaran, Shin, and Smith (Estimating long-run relationships in dynamic heterogeneous panels, DAE Working Papers Amalgamated Series 9721; Pooled mean group estimation of dynamic heterogeneous panels, Journal of the American Statistical Association 94: 621–634).