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Why Low Inequality Spurs Growth: Savings and Investment by the Poor

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  • Nancy Birdsall
  • Thomas C. Pinckney
  • Richard H. Sabot

Abstract

This paper discusses the ways in which macroeconomic developments can put stress on banks, and in extreme cases lead to banking crises. There are many ways in which this can occur, and no specific mechanism is endorsed. These macroeconomic causes of bank vulnerability and crisis have important implications for regulatory regimes, and for macroeconomic policy itself. Much of the discussion emphasizes the need to set monetary policy with an eye on the state of the domestic banking system.

Suggested Citation

  • Nancy Birdsall & Thomas C. Pinckney & Richard H. Sabot, 1996. "Why Low Inequality Spurs Growth: Savings and Investment by the Poor," Research Department Publications 4034, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:4034
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    References listed on IDEAS

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    1. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-244, April.
    2. Bhalla, Surjit S., 1978. "The role of sources of income and investment opportunities in rural savings," Journal of Development Economics, Elsevier, vol. 5(3), pages 259-281, September.
    3. Clarke, George R. G., 1995. "More evidence on income distribution and growth," Journal of Development Economics, Elsevier, vol. 47(2), pages 403-427, August.
    4. Bruton, Henry J., 1985. "The search for a development economics," World Development, Elsevier, vol. 13(10-11), pages 1099-1124.
    5. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
    6. Alesina, Alberto & Perotti, Roberto, 1994. "The Political Economy of Growth: A Critical Survey of the Recent Literature," The World Bank Economic Review, World Bank, vol. 8(3), pages 351-371, September.
    7. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
    8. Jacoby, Hanan G, 1994. "Borrowing Constraints and Progress through School: Evidence from Peru," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 151-160, February.
    9. Alderman, Harold & Garcia, Marito, 1993. "Poverty, household food security, and nutrition in rural Pakistan:," Research reports 96, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Thi Thu Hoai Dang, 2019. "Does Horizontal Inequality Matter in Vietnam?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(3), pages 943-956, October.
    2. Dang Thi Thu Hoai, 2017. "Group-based inequalities: The case of Vietnam," WIDER Working Paper Series wp-2017-18, World Institute for Development Economic Research (UNU-WIDER).
    3. Mark A. McCoon, 2015. "Determinants of Latin America’s Overreliance on International Trade Taxation," Accounting and Finance Research, Sciedu Press, vol. 4(4), pages 1-60, November.
    4. Dang Thi Thu Hoai, 2017. "Group-based inequalities: The case of Vietnam," WIDER Working Paper Series 018, World Institute for Development Economic Research (UNU-WIDER).

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