Despite making significant progress in reducing poverty over the last several decades, the world has witnessed persistent surge in global inequality. The aim of this study is to investigate the relationship between natural resource, environmental vulnerability, monetary-fiscal stability, and inequality in a global perspective during 2005 to 2019 for 61 countries. We distinguish between consumption and income inequality to see whether the variables under study have different implications for different measurement of inequality. The study employs Driscoll-Kraay standard error method which can account for the cross-sectional dependence between the countries. The study divides 61 countries according to the World Bank income classifications to provide evidence of heterogeneity in the sample economies. The main finding highlights that natural resources induce both consumption and income inequality whereas greenhouse gas emissions have been found to reduce the inequality of both types. Quality of government and access to electricity decrease consumption and income inequality while technological innovation and monetary-fiscal stability have incremental impacts on inequality. The coefficient of natural disaster has been shown to be positive for consumption inequality but negative and insignificant for income inequality. When analyzing moderating impacts, we find that quality of government cannot moderate the positive impact of natural resources on consumption inequality, but it can exacerbate the resources' impact on income inequality. The result for sub-sample group also differs for consumption and income inequality. The study recommends management of natural resources in a sustainable way with the help of good governance.
Keywords: Environmental vulnerability; Governance; Inequality; Monetary-fiscal stability; Natural resource.
© 2022. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.