Income Inequality and Public Debt: What Can Be Learned from the Lebanese Indebtedness?

What is it about?

This paper examines the impact of domestic public debt on income inequality in Lebanon. The analysis is carried out using the Autoregressive Distributed Lag (ARDL) approach, and Error Correction Model (ECM). The data used covers the period between 1990 and 2015.

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Why is it important?

To our knowledge, this paper is the first to study the impact of domestic public debt on income inequality in Lebanon. Moreover, it coincides with the biggest socio-economic crisis since the end of the civil war in the country. Our results show that the domestic share of public debt has a positive and significant effect on income inequality. Hence, a bigger share of domestic public debt leads to wider income inequality.