Impact of Inflation and Exchange Rate on ASEAN Income Inequality

Abstract

The study aims to examine and analyse the inequality of income in ASEAN countries. The income inequality among ASEAN countries was measured by using the Williamson index. The trend of inequality was also described in a graph. Furthermore, the affecting factors of the inequality of income such as economic growth, inflation and exchange rate were analyzed by using panel data regression. The study used the data from 1994 to 2019. The results showed that the average of Williamson index is 0.71, which indicates the high inequality in ASEAN. Meanwhile, the trend of inequality during the last 25 years showed a decline from year to year. The result shows that the income inequality is affected by inflation and exchange rate significantly. Consequently, this highlights the significance of exchange rate and inflation on the reduction of inequality and also the promotion of ASEAN economic integration.