scholarly journals A Reassessment of the Relationship Between Inequality and Growth

2000 ◽  
Vol 90 (4) ◽  
pp. 869-887 ◽  
Author(s):  
Kristin J Forbes
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Negative Relationship ◽  
Data Set ◽  
Omitted Variable Bias ◽  
Specific Effects ◽  
Variable Bias ◽  
Time Invariant ◽  
The Relationship ◽  
Country Specific

This paper challenges the current belief that income inequality has a negative relationship with economic growth. It uses an improved data set on income inequality which not only reduces measurement error, but also allows estimation via a panel technique. Panel estimation makes it possible to control for time-invariant country-specific effects, therefore eliminating a potential source of omitted-variable bias. Results suggest that in the short and medium term, an increase in a country's level of income inequality has a significant positive relationship with subsequent economic growth. This relationship is highly robust across samples, variable definitions, and model specifications. (JEL O40, O15, E25)

scholarly journals Inflation and Economic Growth: a Review of The International Literature

2017 ◽  
Vol 20 (3) ◽  
pp. 41-56 ◽  
Author(s):  
Foluso A. Akinsola ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Negative Relationship ◽  
Threshold Level ◽  
Data Set ◽  
Developed Economies ◽  
The Impact ◽  
The Relationship ◽  
Over Time ◽  
Country Specific

This paper surveys the existing literature on the relationship between inflation and economic growth in developed and developing countries, highlighting the theoretical and empirical indications. The study finds that the impact of inflation on economic growth varies from country to country and over time. The study also finds that the results from these studies depend on country‑specific characteristics, the data set used, and the methodology employed. On balance, the study finds overwhelming support in favour of a negative relationship between inflation and growth, especially in developed economies. However, there is still much controversy about the specific threshold level of inflation that is appropriate for growth. Most previous studies on this subject just assume a unidirectional causal relationsship between inflation and economic growth. To our knowledge, this may be the first review of its kind to survey, in detail, the existing research on the relationship between inflation and economic growth in developed and developing countries.

Do Natural Resources Fuel Authoritarianism? A Reappraisal of the Resource Curse

2011 ◽  
Vol 105 (1) ◽  
pp. 1-26 ◽  
Author(s):  
STEPHEN HABER ◽  
VICTOR MENALDO
Keyword(s):  
Natural Resources ◽  
Large Body ◽  
Negative Relationship ◽  
Resource Curse ◽  
Omitted Variable Bias ◽  
Long Run ◽  
Variable Bias ◽  
Short Time ◽  
Time Invariant ◽  
Country Specific

A large body of scholarship finds a negative relationship between natural resources and democracy. Extant cross-country regressions, however, assume random effects and are run on panel datasets with relatively short time dimensions. Because natural resource reliance is not an exogenous variable, this is not an effective strategy for uncovering causal relationships. Numerous sources of bias may be driving the results, the most serious of which is omitted variable bias induced by unobserved country-specific and time-invariant heterogeneity. To address these problems, we develop unique historical datasets, employ time-series centric techniques, and operationalize explicitly specified counterfactuals. We test to see if there is a long-run relationship between resource reliance and regime type within countries over time, both on a country-by-country basis and across several different panels. We find that increases in resource reliance are not associated with authoritarianism. In fact, in many specifications we generate results that suggest a resource blessing.

scholarly journals Disintegrated Impact of Trade Openness on Income Inequality: Empirical Evidence from Bangladesh

2021 ◽  
Vol 11 (3) ◽  
pp. 1
Author(s):  
Munem Ahmad Chowdhury ◽  
Hafsa Rahman Nijhum ◽  
Kazi Mohammed Kamal Uddin
Keyword(s):  
Income Inequality ◽  
Trade Openness ◽  
Export Sector ◽  
Omitted Variable Bias ◽  
Long Run ◽  
Labor Welfare ◽  
Import And Export ◽  
Variable Bias ◽  
Bound Test ◽  
The Relationship

There have been many studies on the relationship between trade and income inequality, but very few of them have distinguished the idea of trade by export and import. For this reason this study is conducted to see how the income inequality of Bangladesh get impacted with the presence of import and export separately. ARDL bound test is used to inspect whether they possess long run relation with income inequality for the period of 1975 to 2016. Thereupon export has been found to be widening the income gap in the long run. Though import improves the situation by abating the gap, it is not significant enough. Besides that other imperative macroeconomic variables are used to condense the omitted variable bias and their outcomes akin to the theory for developing country aspect. Furthermore, models like FMOLS, DOLS and CCR are used for ensuring the robustness of the result and other diagnostic tests support the validity of the result. Moreover policies related to labor welfare need to be set in a manner so that minimum wage allows a worker to lead a healthy life which will help keeping him or her productive. In addition, correspondent authority should frame the policies to diversify the export sector to give the opportunity to small entrepreneurs a chance to enter by providing the convenient environment.

scholarly journals Energy – Growth Nexus- A Case of South Asian Countries

2021 ◽  
Vol 8 (2) ◽  
pp. 58-66
Author(s):  
Saddam Hussain ◽  
Chunjiao Yu ◽  
Liu Wan
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
South Asian ◽  
Fixed Effects ◽  
Asian Countries ◽  
Economic Determinants ◽  
Omitted Variable Bias ◽  
Variable Bias ◽  
Macroeconomic Determinants ◽  
The Relationship

The relationship between energy consumption and economic growth is a hot issue in today's society. This paper aims to empirically verify the relationship between energy consumption and economic growth. This article analyzes the relation of energy consumption with the economic growth taking the case of South Asian countries (Afghanistan, Bangladesh, Bhutan, India, Pakistan, Sri Lanka, and Nepal) along with the macroeconomic determinants that affect the total economic growth – FDI growth, CPI rate and population growth in order to avoid omitted variable bias and misleading results. The time span of this study covers the period of 1980–2019. To examine the significant relation of these determinants and impact of energy consumption on economic growth, In-pooled regression, Fixed-effects, Bidirectional fixed effect, Random-effects, and GLS estimation regression model are used. The estimated results show a positive correlation of energy consumption and all other economic determinants with economic growth except CPI, where there is a negative correlation founded.

scholarly journals Cashless Payments and Economic Growth: Evidence from Selected OECD Countries

2020 ◽  
Vol 9 (s1) ◽  
pp. 189-213
Author(s):  
Teck-Lee Wong ◽  
Wee-Yeap Lau ◽  
Tien-Ming Yip
Keyword(s):  
Economic Growth ◽  
Credit Card ◽  
Oecd Countries ◽  
Annual Data ◽  
Policy Recommendations ◽  
Debit Card ◽  
Omitted Variable Bias ◽  
Variable Bias ◽  
Card Payment ◽  
The Relationship

AbstractThis study investigates the relationship between cashless payments and economic growth in selected OECD countries. Using annual data from 2007 to 2016, our results indicate that: Firstly, cashless payment stimulates economic growth in OECD countries. Specifically, the growth-enhancing effect is found in debit card payment while credit card, e-money and cheque payment have no impact on economic growth; Secondly, the positive relationship between economic growth and debit card payment is robust after controlling for the effect of endogeneity, omitted variable bias and outliers. Based on the findings, this study offers some imperative policy recommendations.

THE EFFECT OF ECONOMIC GROWTH ON INCOME INEQUALITY:PANEL DATA ANALYSIS FROM FIFTY COUNTRIES

INFO ARTHA ◽  
2021 ◽  
Vol 5 (1) ◽  
pp. 1-10
Author(s):  
Alamanda Alamanda
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Income Inequality ◽  
Random Effect ◽  
Random Effect Model ◽  
High Income ◽  
Data Set ◽  
Middle Income ◽  
The Rich ◽  
The Relationship

The relationship between economic growth and income inequality is one of the controversial issues in macroeconomics. Many studies have been done to show the relationship between economic growth and income inequality. However, the research about this problem by using panel data is still minimum. Also, there is still no research that differentiates the effect between lower-middle, upper-middle, and high-income countries. This paper examines the effect of economic growth on income inequality by analysing a panel data set of fifty countries from 2000 to 2018. Using the Pooled OLS, Fixed Effect, and Random Effect Model, this paper finds that economic growth has a positive significant impact on income inequality, which means the higher the economic growth, the bigger the gap between the rich and the poor. The empirical evidence suggests that a one-point increase in GDP growth will increase the Gini Index by 0.082 to 0.085 points on average. Moreover, the paper finds that the effect of economic growth on increasing the incidence of income inequality seems to be higher in lower-middle and upper-middle income countries than in high-income countries.

A NOTE ON INFLATION, ECONOMIC GROWTH, AND INCOME INEQUALITY

2009 ◽  
Vol 13 (1) ◽  
pp. 138-147 ◽  
Author(s):  
Yi Jin
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Income Inequality ◽  
Endogenous Growth ◽  
Money Growth ◽  
Relative Importance ◽  
Long Run ◽  
Endogenous Growth Model ◽  
The Relationship ◽  
Negative Growth

This paper develops a monetary endogenous growth model with capital and skill heterogeneity to analyze the relationship among inflation, growth, and income inequality. In the model inflation, growth, and inequality are jointly determined. We show that an increase in the long-run money growth rate raises inflation and reduces growth, but its effect on income inequality depends on the relative importance of the two types of heterogeneity. Inequality shrinks with the rise of inflation when capital heterogeneity dominates and enlarges when skill heterogeneity dominates. Therefore, our model supports a negative (positive) inflation–inequality relationship and a positive (negative) growth–inequality relationship when capital (skill) heterogeneity dominates. In any event, inflation and growth are negatively related.

scholarly journals Economic Growth and Income Inequality in Developing Countries

2015 ◽  
Vol 9 (6) ◽  
pp. 79-82 ◽  
Author(s):  
Morteza Nemati ◽  
Ghasem Raisi
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Income Distribution ◽  
Economic System ◽  
Development Strategy ◽  
Low Income ◽  
Poverty Eradication ◽  
The Relationship ◽  
Selection Of

Nowadays, improvement in income distribution and poverty eradication and hence low inequality are served as the main objectives of economic and social development strategy even prior than primary tasks of governments. to manifest importance of income distribution, some economists adopt income inequality and income distribution in society as criteria for economic system of the community, although these criteria and measures are theoretical for the economic system and this varies from the perspective of different people, however, it denotes on  importance of income distribution among individuals. The main objective of this study was to evaluate the effect of economic growth on income inequality in the selection of low-income developing countries.To this end, using panel data and data for 28 developing countries over the period 1990-2010 the relationship between GDP and the Gini coefficient was examined. The results indicate that as per hypothesis Kuznets in the early stages of growth, income inequality increases and then it declines in later stage.

scholarly journals Lock-In and Team Effects

2015 ◽  
Vol 18 (4) ◽  
pp. 376-387
Author(s):  
Trey Dronyk-Trosper ◽  
Brandli Stitzel
Keyword(s):  
Set Covering ◽  
Future Research ◽  
Prior Work ◽  
Omitted Variable Bias ◽  
Specific Effects ◽  
Heterogeneous Effects ◽  
Team Success ◽  
Variable Bias ◽  
Lock In ◽  
Least Squares Approach

How important is recruiting to a football program’s success? While prior research has attempted to answer this question, we utilize an extensive panel set covering 13 years of games along with a two-stage least squares approach to investigate the effects of recruiting on team success. This article also includes new control variables to account for omitted variable bias that prior work may have missed. We also split our sample to investigate whether recruiting displays heterogeneous effects across schools. Additionally, we find evidence that the benefits of recruiting are driven by team-specific effects, indicating that team success may be more heavily derived from the ability of teams to harness and improve their recruits than their ability to utilize each athlete’s raw abilities. This leads to important revelations regarding future research into both the value of recruits and what drives a football team’s success.

The Impact of ICT Investment on Establishment Productivity

2003 ◽  
Vol 184 ◽  
pp. 99-110 ◽  
Author(s):  
Thomas Zwick
Keyword(s):  
Panel Data ◽  
Unobserved Heterogeneity ◽  
Data Set ◽  
Omitted Variable Bias ◽  
Lagged Effects ◽  
Variable Bias ◽  
Employee Characteristics ◽  
The Impact ◽  
Establishment Panel Data

This paper finds substantial effects of ICT investments on productivity for a large and representative German establishment panel data set. In contrast to the bulk of the literature also establishments without ICT capital are included and lagged effects of ICT investments are analysed. In addition, a broad range of establishment and employee characteristics are taken account of in order to avoid omitted variable bias. It is shown that taking into account unobserved heterogeneity of the establishments and endogeneity of ICT investments increases the estimated lagged productivity impact of ICT investments.

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