Fisher Variables and Income Inequality in the BRICS

In this paper we empirically investigate how the evolution of the three Fisher Variables (income growth, interest rates, and the price level) have driven income inequality across a variety of countries, with particular focus on Brazil, Russia, India, China, and South Africa (known as the BRICS economies), during the period 2001 to 2015. The results suggest that increases in inflation and real income growth contribute to increases in income inequality. We find some evidence that increases in real interest rates correspond with higher income inequality. The results also reveal that the relationship between the three Fisher Variables and income inequality for the BRICS economies is stronger compared to the full sample. Interestingly, for these five economies, the relationship between real interest rates and income inequality is negative.