Does inequality benefit growth? New evidence using a panel VAR approach
| Autor: | Marcelo Eduardo Alves da Silva |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Economics and Econometrics
Inequality media_common.quotation_subject 05 social sciences Developing country Monetary economics Development Capital market imperfections Human capital Economic inequality 0502 economics and business Political Science and International Relations Economics 050207 economics Lower income 050205 econometrics media_common |
| Zdroj: | International Journal of Development Issues. 19:63-76 |
| ISSN: | 1446-8956 |
| Popis: | Purpose This paper aims to investigate the dynamic relationship between economic growth and income inequality, an issue that has not found a clear consensus in the literature. Design/methodology/approach The paper uses a Panel VAR approach, using state-level data for Brazil, to assess the dynamic effects of inequality on economic growth and vice versa. Findings The paper shows that inequality shocks lead to higher economic growth, therefore supporting the view that, in poor countries, higher inequality does benefit economic growth. The paper also presents evidence that higher growth leads to lower income inequality. The results are robust to different inequality measures and when a measure of human capital accumulation is included in the estimation. Originality/value Recent evidence has favored the idea that higher inequality hurts economic growth. This paper shows that this might not be the case when the dynamic relationship between growth and inequality is examined in a developing country with high inequality and capital market imperfections. |
| Databáze: | OpenAIRE |
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