Interrelation between Growth and Inequality

Jong Woo Kang

No 447, ADB Economics Working Paper Series from Asian Development Bank

Abstract: Inclusive growth should ensure “broad-based” economic growth which characterizes the pattern of growth. Beyond simple association identification implied by the Kuznets curve and cross-country panel regression analyses, this study attempts to shed light on the dynamic causality relationship and impact channel between economic growth and inequality—using vector error correction model (VECM) and vector autoregression (VAR) models for individual economies. If growth has a negative impact on inequality, renewed attention should be paid to curbing inequality. Those economies experiencing inclusive growth can further promote growth with less risk of sacrificing equity. This also provides useful implications for development interventions through designing and monitoring projects and programs. Given the growing challenges of reducing inequality, economies could create a proper inequality target as a binding constraint in pursuing economic growth, instead of using a growth–first and redistribution–later strategy.

Keywords: dynamic causality; economic growth; inequality (search for similar items in EconPapers)
JEL-codes: C32 O10 O40 (search for similar items in EconPapers)
Pages: 75 pages
Date: 2015-08-28
New Economics Papers: this item is included in nep-gro and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.adb.org/publications/interrelation-between-growth-inequality Full text (text/html)

Related works:
Working Paper: Interrelation Between Growth and Inequality (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0447

Access Statistics for this paper

More papers in ADB Economics Working Paper Series from Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Contact information at EDIRC.
Bibliographic data for series maintained by Orlee Velarde ().