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Size matters: measuring the effects of inequality and growth shocks

Sanghamitra Bandyopadhyay () and Rui Sun

No wp-2020-177, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Understanding the relationship between income inequality and economic growth is of utmost importance to economists and social scientists. In this paper we use a Bayesian structural vector autoregression approach to estimate the relationship between inequality and growth via growth and inequality shocks for two large economies, China and the USA, for the years 1979-2018. We find that a growth shock is inequality-increasing, and an inequality shock is growth-reducing.

Keywords: Inequality; Growth; Bayesian estimation; structural VAR; China; United States (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cna
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