EconPapers    
Economics at your fingertips  
 

Inequality and Growth: Nonlinear Evidence from Heterogeneous Panel Data

Dooyeon Cho, Bo Kim and Dong-Eun Rhee

No 14-1, Working Papers from Korea Institute for International Economic Policy

Abstract: This paper investigates the nonlinear relationship between income inequality and economic growth using a heterogeneous panel data set of 77 countries. The estimated nonlinear function exhibits relatively smooth regime switching, as regards the income inequality level in the previous period. The point above which the time-varying coefficient estimate on inequality turns from positive to negative is found to be the Gini index of 24.5. The results suggest that while inequality hinders economic growth in most of the countries, it accelerates economic growth only in a country where the level of inequality is very low. Furthermore, the results reveal that the negative effects of income inequality on economic growth become more serious in developing countries whose level of inequality is relatively higher. The supplementary linear regressions with various specifications generally confirm the results obtained from the nonlinear model.

Keywords: Growth; Inequality; Nonlinearity; Panel Smooth Transition Regression Model (search for similar items in EconPapers)
JEL-codes: C23 O11 O15 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-10-24
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://dx.doi.org/10.2139/ssrn.2533846 Full text (application/pdf)

Related works:
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:kiepwp:2014_001

Access Statistics for this paper

More papers in Working Papers from Korea Institute for International Economic Policy [30147] 3rd Floor Building C Sejong National Research Complex 370 Sicheong-daero Sejong-si, Korea. Contact information at EDIRC.
Bibliographic data for series maintained by Juwon Seo ( this e-mail address is bad, please contact ).

 
Page updated 2024-10-25
Handle: RePEc:ris:kiepwp:2014_001