Recent studies have demonstrated that the detection of complex temporal envelopes relies - at least partially - on the perception of a distortion component generated by a peripheral (cochlear) and/or central (post-cochlear) non-linearity. In the present study, first- and second-order amplitude modulation (AM) detection thresholds were obtained in normally hearing (NH) and hearing-impaired (HI) listeners using a 2-kHz pure-tone carrier. In both groups of listeners, first-order AM detection thresholds were measured for AM rates fm ranging between 4 and 87 Hz, and second-order AM detection thresholds were measured for second-order AM rates fm' ranging between 4 and 23 Hz, using a fixed first-order 'carrier' AM rate fm of 64 Hz. When the sound pressure level was adjusted in order to yield equal detectability in both groups for the 64-Hz first-order carrier modulation, (i) first-order AM detection thresholds for the HI listeners were normal at fm=87 Hz, and better-than-normal at fm=4 and 16 Hz, and (ii) second-order AM detection thresholds were identical at all modulation rates in NH and HI listeners. Similar results were obtained when the audibility of the 2-kHz pure-tone carrier was equated for both groups, i.e. when listeners were tested at the same sensation level. These results demonstrate clearly that cochlear damage has no effect on the detection of complex temporal envelopes, and indicate that the distortion component must be generated by a more central non-linearity than cochlear compression, transduction, or short-term adaptation.