We con­duct a com­pre­hen­si­ve empi­ri­cal inves­ti­ga­ti­on of the link bet­ween ine­qua­li­ty and finan­cial open­ness. We docu­ment that the rela­ti­onship varies con­sider­a­b­ly not only over time, but also across the main com­pon­ents of total exter­nal lia­bi­li­ties, which have been lar­ge­ly over­loo­ked by the exis­ting lite­ra­tu­re. In emer­ging mar­ket eco­no­mies (EMEs), an increase in a country’s exter­nal lia­bi­li­ties is asso­cia­ted with an initi­al rise and a sub­se­quent fall in ine­qua­li­ty. This appears to be dri­ven by the fact that the chan­nels through which finan­cial open­ness increa­ses ine­qua­li­ty tend to be acti­ve imme­dia­te­ly, while the ine­qua­li­ty-decre­asing chan­nels tend to ope­ra­te with a lag. The link bet­ween finan­cial open­ness and ine­qua­li­ty tends to be sub­stan­ti­al­ly wea­k­er in advan­ced eco­no­mies than in EMEs.

Quel­le /​ Link: Finan­cial Open­ness and Inequality