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Economic Policy Uncertainty and Income Inequality Across Europe

Don Bredin, Stilianos Fountas Orcid Logo, Evi Tzika Orcid Logo

International Journal of Finance & Economics, Pages: 1 - 17

Swansea University Author: Evi Tzika Orcid Logo

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DOI (Published version): 10.1002/ijfe.70161

Abstract

This paper investigates the impact of Economic Policy Uncertainty (EPU) on incomeinequality across a broad set of European countries from 1995 to 2022, with a particular focus on the core-periphery divide. Applying both time series and panel datamethodologies—including Vector Autoregressions (VAR),...

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Published in: International Journal of Finance & Economics
ISSN: 1076-9307 1099-1158
Published: Wiley 2026
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URI: https://cronfa.swan.ac.uk/Record/cronfa71330
first_indexed 2026-01-28T12:30:55Z
last_indexed 2026-02-06T06:54:47Z
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spelling 2026-02-05T12:46:43.1716870 v2 71330 2026-01-28 Economic Policy Uncertainty and Income Inequality Across Europe 4116c447150cf4847dd56dc62328ff09 0000-0002-5103-8178 Evi Tzika Evi Tzika true false 2026-01-28 SOSS This paper investigates the impact of Economic Policy Uncertainty (EPU) on incomeinequality across a broad set of European countries from 1995 to 2022, with a particular focus on the core-periphery divide. Applying both time series and panel datamethodologies—including Vector Autoregressions (VAR), panel VAR, and local projections—we assess how economic uncertainty influences inequality dynamics. Our findingsreveal three key insights. First, uncertainty shocks significantly affect income inequalityin nearly all countries, and the effect is time-varying. Second, the effect is heterogeneousacross countries but varies: uncertainty tends to reduce inequality in core Europeancountries such as Belgium, Germany, Ireland, and the Netherlands, while mainly increasing it in periphery and intermediate countries like France, Greece, Italy, and Spain.Third, panel analysis confirms this asymmetry, showing more persistent and positiveinequality effects in periphery countries. These results suggest that income inequalityin Europe’s periphery is more vulnerable to economic uncertainty, underscoring theimportance of stable policy environments and targeted fiscal responses. Journal Article International Journal of Finance &amp; Economics 0 1 17 Wiley 1076-9307 1099-1158 economic uncertainty, income inequality, panel LP, rolling impulse response functions, VAR models 27 1 2026 2026-01-27 10.1002/ijfe.70161 COLLEGE NANME Social Sciences School COLLEGE CODE SOSS Swansea University This work was supported by the University of Macedonia ResearchFund and Science Foundation Ireland (SFI) (16/SPP/3347). 2026-02-05T12:46:43.1716870 2026-01-28T12:21:44.8400187 Faculty of Humanities and Social Sciences School of Social Sciences - Economics Don Bredin 1 Stilianos Fountas 0000-0003-4188-9777 2 Evi Tzika 0000-0002-5103-8178 3 71330__36125__ed3b87fc9be24a4bba817800069282da.pdf inequality___JIFE__manuscript.pdf 2026-01-28T12:29:15.4770824 Output 9800234 application/pdf Accepted Manuscript true Author accepted manuscript document released under the terms of a Creative Commons CC-BY licence using the Swansea University Research Publications Policy (rights retention). true eng https://creativecommons.org/licenses/by/4.0/deed.en
title Economic Policy Uncertainty and Income Inequality Across Europe
spellingShingle Economic Policy Uncertainty and Income Inequality Across Europe
Evi Tzika
title_short Economic Policy Uncertainty and Income Inequality Across Europe
title_full Economic Policy Uncertainty and Income Inequality Across Europe
title_fullStr Economic Policy Uncertainty and Income Inequality Across Europe
title_full_unstemmed Economic Policy Uncertainty and Income Inequality Across Europe
title_sort Economic Policy Uncertainty and Income Inequality Across Europe
author_id_str_mv 4116c447150cf4847dd56dc62328ff09
author_id_fullname_str_mv 4116c447150cf4847dd56dc62328ff09_***_Evi Tzika
author Evi Tzika
author2 Don Bredin
Stilianos Fountas
Evi Tzika
format Journal article
container_title International Journal of Finance &amp; Economics
container_volume 0
container_start_page 1
publishDate 2026
institution Swansea University
issn 1076-9307
1099-1158
doi_str_mv 10.1002/ijfe.70161
publisher Wiley
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Social Sciences - Economics{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Social Sciences - Economics
document_store_str 1
active_str 0
description This paper investigates the impact of Economic Policy Uncertainty (EPU) on incomeinequality across a broad set of European countries from 1995 to 2022, with a particular focus on the core-periphery divide. Applying both time series and panel datamethodologies—including Vector Autoregressions (VAR), panel VAR, and local projections—we assess how economic uncertainty influences inequality dynamics. Our findingsreveal three key insights. First, uncertainty shocks significantly affect income inequalityin nearly all countries, and the effect is time-varying. Second, the effect is heterogeneousacross countries but varies: uncertainty tends to reduce inequality in core Europeancountries such as Belgium, Germany, Ireland, and the Netherlands, while mainly increasing it in periphery and intermediate countries like France, Greece, Italy, and Spain.Third, panel analysis confirms this asymmetry, showing more persistent and positiveinequality effects in periphery countries. These results suggest that income inequalityin Europe’s periphery is more vulnerable to economic uncertainty, underscoring theimportance of stable policy environments and targeted fiscal responses.
published_date 2026-01-27T05:33:51Z
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score 11.096007

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