Inequality and growth: the neglected time dimension

Daniel Halter, Manuel Oechslin () and Josef Zweim�ller
Authors registered in the RePEc Author Service: Josef Zweimüller ()

No 507, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: The empirical literature on the relationship between inequality and growth offers a contradictory assessment: Estimators based on time-series variation indicate a positive link while estimators (also) exploiting the cross-sectional variation suggest a negative relationship. The present paper (i) confirms this conflicting pattern in an expanded dataset; (ii) proposes a simple theoretical framework to highlight the biases associated with the different techniques. We argue that mechanisms generating a positive inequality-growth relationship work mainly in the short-run and are reflected in difference-based estimators. In contrast, mechanisms generating a negative relationship work over the longer term and are reflected in level-based estimators.

Keywords: Inequality; growth; short-run effects; long-run effects (search for similar items in EconPapers)
JEL-codes: C23 O11 O15 O43 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-dev and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (57)

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https://www.zora.uzh.ch/id/eprint/63309/1/iewwp507.pdf (application/pdf)

Related works:
Journal Article: Inequality and growth: the neglected time dimension (2014)
Working Paper: Inequality and Growth: The Neglected Time Dimension (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:507

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