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The Relationship between Inequality and Growth: Evidence from New Data

Summary

The relationship between inequality and growth has attracted a lot of attention in the previous literature. Estimation of this relationship may be biased by simultaneity, omitted variables and measurement error. The present paper contributes to the existing work by introducing the wealth Gini coefficient as a new inequality measure. The most reliable and recent data on income inequality are used for estimation. We employ the Arellano-Bond GMM estimation technique and we find that there seems to be a positive relationship between wealth inequality and real per capita GDP growth, but this relationship is not robust to different model specifications.

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Correspondence to Costanza Naguib.

Additional information

I would like to thank the Editor Volker Grossmann and two anonymous referees for their insightful suggestions.

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Naguib, C. The Relationship between Inequality and Growth: Evidence from New Data. Swiss J Economics Statistics 153, 183–225 (2017). https://doi.org/10.1007/BF03399507

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JEL-Classification

  • D30
  • O40

Keyword

  • income inequality
  • wealth inequality
  • Gini coefficient
  • economic growth
  • dynamic panel data
  • GMM estimation