By reviewing US state-level panel data on infrastructure spending and on per capita income inequality from 1950 to 2010, this paper sets out to test whether an empirical link exists between infrastructure and inequality. Panel regressions with fixed effects show that an increase in the growth rate of spending on highways and higher education in a given decade correlates negatively with Gini indices at the end of the decade, thus suggesting a causal effect from growth in infrastructure spending to a reduction in inequality through better access to education and opportunities for employment. More significantly, this relationship is more pronounced with inequality at the bottom 40 percent of the income distribution. In addition, infrastructure expenditures on highways are shown to be more effective at reducing inequality. By carrying out a counterfactual experiment, the results show that those US states with a significantly higher bottom Gini coefficient in 2010 had underinvested in infrastructure during the previous decade. From a policy-making perspective, new innovations in finance for infrastructure investments are developed, for the US, other industrially advanced countries and also for developing economies.

A panel data analysis of nonlinear government expenditure and income inequality dynamics in a macroprudential policy regime was conducted on a panel of 15 emerging countries from 1985–2019, where there had been a non-prudential regime from 1985–1999 and a prudential regime from 2000–2019. The paper explored the validity of the nonlinearity between government expenditure and income inequality in the macroprudential policy regime as well as the threshold level at which excessive spending reduces income inequality using the Bayesian spatial lag panel smooth transition regression (BSPSTR) and fix effect models. The BSPSTR model was adopted due to its ability to address the problems of heterogeneity, endogeneity, and cross-section correlation in a nonlinear framework. Moreover, as the transition variable often varies across time and space, the effect of the independent variables can also be time- and space-varying. The results reveal evidence of a nonlinear effect between government spending and income inequality, where the minimum level of government spending is found to be 29.89 percent of GDP, above which expenditure reduces inequality in emerging countries. The findings confirmed an inverted U-shaped relationship. The focal policy recommendation is that fiscal policy decisions that will reinforce the need for more emphasis on education and public expenditure on education and health, as important tools for improving income inequality, are crucial for these economies. Caution is needed when introducing macroprudential policies, especially at a low level of government expenditure.

The objective of this research is to examine the effects of income inequality, governance quality, and their interaction on environmental quality in Asian countries. Time series data are obtained from 45 Asian countries for the period 1996–2020 for this empirical analysis. The research has performed various econometric tests to ensure the robustness and reliability of the results. We have addressed different econometric issues, such as autocorrelation, heteroskedasticity, and cross-sectional dependence, using the Driscoll-Kraay (DK) standard error estimation and endogeneity issues by the system generalized method of moments (S-GMM). The results of the study revealed that income inequality and governance quality have a positive impact on environmental degradation, while the interaction of governance quality with income inequality has a negative effect on it. In addition, economic growth, population growth, urbanization, and natural resource dependency are found to deteriorate the quality of the environment. The findings of the study offer insightful policies to reduce environmental degradation in Asian countries.