Abstract

http://ssrn.com/abstract=1240317
 
 

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An Empirical Analysis of the Relationship between Income Inequality and Growth Volatility in 70 Countries for 1960-2002


Laszlo Konya


La Trobe University - School of Economics

Chris Mouratidis


affiliation not provided to SSRN

August 20, 2008

Applied Econometrics and International Development, Vol. 6, No. 1, 2006

Abstract:     
The aim of this paper is to study the potentially simultaneous relationship between income inequality and growth volatility for seventy countries between 1960 and 2002. Two types of analysis are performed; a cross-sectional analysis based on country averages of all available annual observations, and a panel-data analysis with fixed effects based on 6-year averages. The cross-sectional and panel estimation results are markedly different. In the first case, there seems to be a mutual relationship between inequality and volatility across countries, but several significant coefficients have illogical signs. In the second case, there is no evidence of simultaneity within a country; inequality is influenced by volatility, but inequality does not have a direct effect on volatility. Given the limitations of the cross-sectional analysis, we believe that the simultaneous relationship found in the cross-sectional model is rather spurious than real.

Number of Pages in PDF File: 12

Keywords: Income inequality, GDP growth volatility, Panel data

JEL Classification: C33, O11, O15, O49

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Date posted: August 20, 2008  

Suggested Citation

Konya, Laszlo and Mouratidis, Chris, An Empirical Analysis of the Relationship between Income Inequality and Growth Volatility in 70 Countries for 1960-2002 (August 20, 2008). Applied Econometrics and International Development, Vol. 6, No. 1, 2006. Available at SSRN: http://ssrn.com/abstract=1240317

Contact Information

Laszlo Konya (Contact Author)
La Trobe University - School of Economics ( email )
Bundoora, Victoria 3086
Australia
Chris Mouratidis
affiliation not provided to SSRN ( email )
Feedback to SSRN


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