Abstract:

It is very important to ensure price stability for the economic and social well-being of societies. Therefore, many strategies have been implemented to ensure price stability in developed or developing countries. Inflation targeting strategy is one of these. The main objective of the inflation target is to ensure and maintain price stability. Price stability is the primary condition for the country’s economies to function properly. One of the indicators that a economy works healthy is the fair income distribution. The inequality in income distribution continues to be a major problem even in developed countries. Although the relationship between inflation rate, economic growth and unemployment rate and income distribution has been analyzed many times in literature, there is no study to study this relationship within the framework of inflation targeting. In this study, the inflation targeting strategy implemented 8 advanced and Turkey included 8 developing in a total of 16 countries between 2002-2016 years inflation rate and income distribution relationship has been tested by panel data analysis. Growth and unemployment rates are also included in the model so that the model is meaningful and can be interpreted as a whole. The unit has been tested the necessary assumption tests for the effective fixed effects model, and the econometric model has been obtained to be finally interpreted by correcting the deviations from the assumption with the Driscoll-Kraay Standard Error Predictor. As the rate of inflation and unemployment rises, the income distribution has disrupted.

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