Current Issue

EXPLORING THE RELATIONSHIPS AMONG STOCK MARKET,  ECONOMIC GROWTH, AND INCOME INEQUALITY IN TAIWAN  USING QUANTILE MEDIATION ANALYSIS

Ming-Lang Yeh, Tzu-Kuang Hsu, and Chien-Wen Hsiao

Abstract

The relationship between the stock market and income inequality is widely acknowledged; however, whether economic growth mitigates or exacerbates this relationship remains an open question. To address this, we apply an innovative quantile mediation analysis to examine the dynamic interactions among the stock market, economic growth, and income inequality in Taiwan from 1976 to 2023. Our study offers two pivotal findings. First, we find no direct relationship between the stock market and income inequality across any quantile of income inequality. Second, while a mediating effect of economic growth is observed at the 0.1 to 0.7 quantiles, this effect diminishes at higher quantiles above 0.8. These results suggest that policymakers should emphasize growth-oriented strategies to effectively reduce income inequality.

Key words: quantile mediation analysis, stock market, economic growth, income inequality, quantile regression