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Growth-Distribution Trade-offs: The Role of Capacity Utilisation

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  • Mohtadi, Hamid

Abstract

Previous empirical studies of the impact of economic growth on income distribution have consistently found statistically insignificant impact. This paper empirically reexamines this impact for a cross section of thirty-nine (advanced and developing) countries, focusing on a new critical factor, i.e., the presence or absence of economic slack. With this factor included, growth becomes significantly unequalizing in a "capital taut" economy, while the presence of slack capacity plays a significantly equalizing role. This suggests that the insignificant finding of previous studies stems from an "averaging out" of these two opposite impacts when this factor is omitted. Copyright 1988 by Oxford University Press.

Suggested Citation

  • Mohtadi, Hamid, 1988. "Growth-Distribution Trade-offs: The Role of Capacity Utilisation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 12(4), pages 419-433, December.
    • Handle: RePEc:oup:cambje:v:12:y:1988:i:4:p:419-33
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    Cited by:

    1. Matthew Odedokun & Jeffery I. Round, 2001. "Determinants of Income Inequality and its Effects on Economic Growth: Evidence from African Countries," WIDER Working Paper Series DP2001-103, World Institute for Development Economic Research (UNU-WIDER).
    2. Muhammad Shahbaz & Mohammad Mafizur Rahman, 2012. "Does Nominal Devaluation Improve Income Distribution? Evidence from Bangladesh," South Asian Survey, , vol. 19(1), pages 61-77, March.
    3. Muhammad, Shahbaz & Faridul, Islam & Muhammad Sabihuddin, Butt, 2011. "Devaluation and income inequality: Evidence from Pakistan," MPRA Paper 35522, University Library of Munich, Germany, revised 21 Dec 2011.
    4. Muhammad Shahbaz & Faridul Islam & Muhammad Sabihuddin Butt, 2013. "Devaluation and Income Inequality Nexus: Evidence from Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 1(4), pages 48-58, April.

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