Causality linkages between income inequality and financial globalization for G7 countries

The main aim of this study is to evaluate the causality linkages between income inequality and financial glo- balization for G7 countries over the period 1970-2015. The bootstrap panel Granger causality analysis by Kónya (2006) is used. The empirical results indicate that there is a causality linkage between income inequality and fi- nancial globalization in most of the G7 countries. Furthermore, it is shown that income tax has a significant role on the causality linkage. Hence, in order to reduce income inequality, policy makers should apply high taxes on top income, using fiscal policy instruments.