Inflation shocks and income inequality

Purpose The purpose of this paper is to analyze the effects of inflationary shocks on inequality, using data of selected countries of the Middle East and North Africa (MENA). Design/methodology/approach Inflationary shocks were measured as deviations from core inflation, based on a genetic algorithm. Bayesian quantile regression was used to estimate the impact of inflationary shocks in different levels of inequality. Findings The results showed that inflationary shocks substantially affect countries with higher levels of inequality, thus suggesting that the detrimental impact of inflation is exacerbated by the high division of classes in a country. Originality/value The study contributes t…