Nexus Between Globalization, Income Inequality and Human Development in Indonesian Economy: Evidence from Application of Partial and Multiple Wavelet Coherence

Abstract

This paper aims at understanding the vigorous connection between globalization, income inequality and human development in Indonesian economy. This study employs Morlet’s wavelet approach. Precisely, it applies several implements of methods including continuous wavelet power spectrum, wavelet coherence, partial and multiple wavelet coherence through a monthly data series during 1990–2016. The outcomes reveal that connections among variables progress over frequency and time domain. From the frequency domain point of view, the current study discovers noteworthy wavelet coherences and robust leads and lag linkages. From the time-domain sight, the results display robust but not consistent associations among the considered variables. From an economic point sight, the wavelet method displays that globalization enhances the income inequality in Indonesian economy. This study emphasizes the significance of having organized strategies by policymakers to cope up with 2–3 years of occurrence of huge inequality in income distribution in Indonesia. Also, the policymakers should keep a watch on co-movements between globalization, income inequality and human development index. The current study presents a unique finding on association and co-movement between globalization, income equality and human development index in Indonesian economy. These outcomes should be of interest to researchers, policymakers and economists.