02116cas a2200253 a 4500 AALejournalIMF016187 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513527871 1018-5941 BD-DhAAL BD-DhAAL Cevik, Serhan. Taking Down the Wall : Transition and Inequality / Serhan Cevik, Carolina Correa-Caro. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (20 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper investigates the main determinants of income inequality in transition countries during the period 1990-2018. To this end, we address a major methodological challenge that lies at the core of the cross-country literature on income inequality: the potential endogeneity of income growth, which is largely ignored by most empirical studies. We adopt a two-pronged empirical strategy by (i) using trading partners' weighted average real GDP as an instrumental variable (IV), and (ii) estimating the model via the two-stage least squares (2SLS) approach for static models and the Generalized Method of Moments (GMM) estimator for dynamic models. Our empirical findings are consistent with the Kuznets curve that illustrates a nonlinear relationship between income inequality and the level of economic development. We also find that the redistributive impact of fiscal policy is statistically insignificant and taxation and government spending appear to have the opposing effects on income inequality in transition economies. Mode of access: Internet Correa-Caro, Carolina. IMF Working Papers; Working Paper ; No. 2020/032 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/032/001.2020.issue-032-en.xml IMF e-Library