IDEAS home Printed from https://ideas.repec.org/p/pre/wpaper/201763.html
   My bibliography  Save this paper

Kuznets Curve for the US: A Reconsideration Using Cosummability

Author

Listed:
  • Adnen Ben Nasr

    (BESTMOD, Institut Supérieur de Gestion de Tunis, Tunisia)

  • Mehmet Balcilar

    (Eastern Mediterranean University, Northern Cyprus, via Mersin 10, Turkey, Montpellier Business School, Montpellier, France and University of Pretoria, Pretoria, 0002, South Africa)

  • Seyi Saint Akadiri

    (Eastern Mediterranean University, Northern Cyprus, via Mersin 10, Turkey)

  • Rangan Gupta

    (University of Pretoria, Pretoria, 0002, South Africa)

Abstract

The relationship between long-run economic growth and income inequality has gained a growing attention in economic research for over decades. This study employed advanced time series techniques to examine the existence of an inverted U-shaped long-run relationship between economic growth and income inequality. Using long-span and very recent data for the United States, for the periods 1917 to 2012, and the concept of summability, balancedness and co-summability, which was advanced to analyze nonlinear long-run relations among stochastic processes. The empirical results find no evidence in support of nonlinear long-run (inverted U-shaped) relationship for the US, but findings from vocal set of economists strongly lends the basis upon which conclusions are drawn in this study.

Suggested Citation

  • Adnen Ben Nasr & Mehmet Balcilar & Seyi Saint Akadiri & Rangan Gupta, 2017. "Kuznets Curve for the US: A Reconsideration Using Cosummability," Working Papers 201763, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201763
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Suresh Babu, M. & Bhaskaran, Vandana & Venkatesh, Manasa, 2016. "Does inequality hamper long run growth? Evidence from Emerging Economies," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 99-113.
    2. Sarah Voitchovsky, 2005. "Does the Profile of Income Inequality Matter for Economic Growth?," Journal of Economic Growth, Springer, vol. 10(3), pages 273-296, September.
    3. Lessmann, Christian, 2014. "Spatial inequality and development — Is there an inverted-U relationship?," Journal of Development Economics, Elsevier, vol. 106(C), pages 35-51.
    4. Sukiassyan, Grigor, 2007. "Inequality and growth: What does the transition economy data say?," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 35-56, March.
    5. Yu Hsing & David Smyth, 1994. "Kuznets's inverted-U hypothesis revisited," Applied Economics Letters, Taylor & Francis Journals, vol. 1(7), pages 111-113.
    6. David N. Weil, 2005. "Accounting for the Effect of Health on Economic Growth," NBER Working Papers 11455, National Bureau of Economic Research, Inc.
    7. (River) Huang, Ho-Chuan & Lin, Shu-Chin & Suen, Yu-Bo & Yeh, Chih-Chuan, 2007. "A quantile inference of the Kuznets hypothesis," Economic Modelling, Elsevier, vol. 24(4), pages 559-570, July.
    8. Ho-Chuan (River) Huang & Yi-Chen Lin & Chih-Chuan Yeh, 2012. "An appropriate test of the Kuznets hypothesis," Applied Economics Letters, Taylor & Francis Journals, vol. 19(1), pages 47-51, January.
    9. Jesús Gonzalo & Jean‐Yves Pitarakis, 2006. "Threshold Effects in Cointegrating Relationships," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(s1), pages 813-833, December.
    10. Dong‐Hyeon Kim & Ho‐Chuan Huang & Shu‐Chin Lin, 2011. "Kuznets Hypothesis In A Panel Of States," Contemporary Economic Policy, Western Economic Association International, vol. 29(2), pages 250-260, April.
    11. Patriarca, Fabrizio & Vona, Francesco, 2013. "Structural change and income distribution: An inverted-U relationship," Journal of Economic Dynamics and Control, Elsevier, vol. 37(8), pages 1641-1658.
    12. Robinson, Sherman, 1976. "A Note on the U Hypothesis Relating Income Inequality and Economic Development," American Economic Review, American Economic Association, vol. 66(3), pages 437-440, June.
    13. Nasfi Fkili Wahiba & Malek El Weriemmi, 2014. "The Relationship Between Economic Growth and Income Inequality," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 135-143.
    14. Hamilton, James D, 2001. "A Parametric Approach to Flexible Nonlinear Inference," Econometrica, Econometric Society, vol. 69(3), pages 537-573, May.
    15. Wan, Guanghua & Lu, Ming & Chen, Zhao, 2006. "The inequality-growth nexus in the short and long run: Empirical evidence from China," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 654-667, December.
    16. Hongyi Li & Heng‐fu Zou, 1998. "Income Inequality is not Harmful for Growth: Theory and Evidence," Review of Development Economics, Wiley Blackwell, vol. 2(3), pages 318-334, October.
    17. Partridge, Mark D, 1997. "Is Inequality Harmful for Growth? Comment," American Economic Review, American Economic Association, vol. 87(5), pages 1019-1032, December.
    18. Hamilton, James D., 2003. "What is an oil shock?," Journal of Econometrics, Elsevier, vol. 113(2), pages 363-398, April.
    19. Huang, Ho-Chuan (River) & Fang, WenShwo & Miller, Stephen M. & Yeh, Chih-Chuan, 2015. "The effect of growth volatility on income inequality," Economic Modelling, Elsevier, vol. 45(C), pages 212-222.
    20. Katherine C. Theyson & Lauren R. Heller*, 2015. "Development and income inequality: A new specification of the Kuznets hypothesis," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(3), pages 103-118, July-Sepe.
    21. Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December.
    22. Shin, Inyong, 2012. "Income inequality and economic growth," Economic Modelling, Elsevier, vol. 29(5), pages 2049-2057.
    23. Huang, Ho-Chuan (River) & Lin, Shu-Chin, 2007. "Semiparametric Bayesian inference of the Kuznets hypothesis," Journal of Development Economics, Elsevier, vol. 83(2), pages 491-505, July.
    24. Rubin, Amir & Segal, Dan, 2015. "The effects of economic growth on income inequality in the US," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 258-273.
    25. Henderson, Daniel J. & Qian, Junhui & Wang, Le, 2015. "The inequality–growth plateau," Economics Letters, Elsevier, vol. 128(C), pages 17-20.
    26. Chan, Kenneth S. & Zhou, Xianbo & Pan, Zhewen, 2014. "The growth and inequality nexus: The case of China," International Review of Economics & Finance, Elsevier, vol. 34(C), pages 230-236.
    27. Nahum, Ruth-Aïda, 2005. "Income Inequality and Growth: A Panel Study of Swedish Counties 1960-2000," Working Paper Series 2005:8, Uppsala University, Department of Economics.
    28. Majumdar, Shibalee & Partridge, Mark D., 2009. "Impact of Economic Growth on Income Inequality: A Regional Perspective," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49270, Agricultural and Applied Economics Association.
    29. Huang, Ho-Chuan River, 2004. "A flexible nonlinear inference to the Kuznets hypothesis," Economics Letters, Elsevier, vol. 84(2), pages 289-296, August.
    30. Banerjee, Abhijit V & Duflo, Esther, 2003. "Inequality and Growth: What Can the Data Say?," Journal of Economic Growth, Springer, vol. 8(3), pages 267-299, September.
    31. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    32. Braulke, Michael, 1983. "A Note on Kuznets' U," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 135-139, February.
    33. Muinelo-Gallo, Leonel & Roca-Sagalés, Oriol, 2013. "Joint determinants of fiscal policy, income inequality and economic growth," Economic Modelling, Elsevier, vol. 30(C), pages 814-824.
    34. Chen, Been-Lon, 2003. "An inverted-U relationship between inequality and long-run growth," Economics Letters, Elsevier, vol. 78(2), pages 205-212, February.
    35. Mr. Garbis Iradian, 2005. "Inequality, Poverty, and Growth: Cross-Country Evidence," IMF Working Papers 2005/028, International Monetary Fund.
    36. Mark W. Frank, 2009. "Inequality And Growth In The United States: Evidence From A New State‐Level Panel Of Income Inequality Measures," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 55-68, January.
    37. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    38. Peter Jacobsen & David Giles, 1998. "Income distribution in the United States: Kuznets' inverted-U hypothesis and data non-stationarity," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(4), pages 405-423.
    39. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
    40. Elina Tuominen, 2015. "Reversal of the Kuznets Curve: Study on the Inequality-Development Relation Using Top Income Shares Data," WIDER Working Paper Series wp-2015-036, World Institute for Development Economic Research (UNU-WIDER).
    41. Berenguer-Rico, Vanessa & Gonzalo, Jesús, 2014. "Summability of stochastic processes—A generalization of integration for non-linear processes," Journal of Econometrics, Elsevier, vol. 178(P2), pages 331-341.
    42. Elina Tuominen, 2015. "Reversal of the Kuznets curve: Study on the inequalitys development relation using top income shares sata," WIDER Working Paper Series 036, World Institute for Development Economic Research (UNU-WIDER).
    43. repec:bla:rdevec:v:2:y:1998:i:3:p:318-34 is not listed on IDEAS
    44. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
    45. Saari, M. Yusof & Dietzenbacher, Erik & Los, Bart, 2015. "Sources of Income Growth and Inequality Across Ethnic Groups in Malaysia, 1970–2000," World Development, Elsevier, vol. 76(C), pages 311-328.
    46. Berenguer Rico, Vanessa, 2013. "Co-summability from linear to non-linear cointegration," UC3M Working papers. Economics we1312, Universidad Carlos III de Madrid. Departamento de Economía.
    47. Lin, Shu-Chin & (River) Huang, Ho-Chuan & Weng, Hsiao-Wen, 2006. "A semi-parametric partially linear investigation of the Kuznets' hypothesis," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 634-647, September.
    48. Federico Cingano, 2014. "Trends in Income Inequality and its Impact on Economic Growth," OECD Social, Employment and Migration Working Papers 163, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shinhye Chang & Matthew W. Clance & Giray Gozgor & Rangan Gupta, 2019. "A Reconsideration of Kuznets Curve across Countries: Evidence from the Co-summability Approach," Working Papers 201970, University of Pretoria, Department of Economics.
    2. Oğuzhan Çepni & Rangan Gupta & Zhihui Lv, 2020. "Threshold effects of inequality on economic growth in the US states: the role of human capital to physical capital ratio," Applied Economics Letters, Taylor & Francis Journals, vol. 27(19), pages 1546-1551, November.
    3. Diego Martínez-Navarro & Ignacio Amate-Fortes & Almudena Guarnido-Rueda, 2020. "Inequality and development: is the Kuznets curve in effect today?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 703-735, October.
    4. Sudeshna Ghosh, 2022. "Effects of tourism on carbon dioxide emissions, a panel causality analysis with new data sets," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 3884-3906, March.
    5. Seyi Saint Akadiri & Ada Chigozie Akadiri, 2018. "Growth and Inequality in Africa: Reconsideration," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(3), pages 76-86, September.
    6. Renee van Eyden & Rangan Gupta & Xin Sheng & Mark E. Wohar, 2019. "Impact of Oil Price Volatility on State-Level Consumption of the United States: The Role of Oil Dependence," Working Papers 201969, University of Pretoria, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shinhye Chang & Matthew W. Clance & Giray Gozgor & Rangan Gupta, 2019. "A Reconsideration of Kuznets Curve across Countries: Evidence from the Co-summability Approach," Working Papers 201970, University of Pretoria, Department of Economics.
    2. Adnen Ben Nasr & Mehmet Balcilar & Rangan Gupta & Seyi Saint Akadiri, 2018. "Asymmetric Effects of Inequality on Per Capita Real GDP of the United States," Working Papers 201820, University of Pretoria, Department of Economics.
    3. Seyi Saint Akadiri & Ada Chigozie Akadiri, 2018. "Growth and Inequality in Africa: Reconsideration," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(3), pages 76-86, September.
    4. Adnen Ben Nasr & Mehmet Balcilar & Rangan Gupta & Seyi Saint Akadiri, 2020. "Asymmetric effects of inequality on real output levels of the United States," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 47-69, March.
    5. Ademola Obafemi Young, 2019. "Growth Impacts of Income Inequality: Empirical Evidence From Nigeria," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 226-262, December.
    6. Lin Shu-Chin & Huang Ho-Chuan & Kim Dong-Hyeon & Yeh Chih-Chuan, 2009. "Nonlinearity between Inequality and Growth," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 13(2), pages 1-20, May.
    7. Batuo, Michael E. & Kararach, George & Malki, Issam, 2022. "The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces," World Development, Elsevier, vol. 157(C).
    8. Yang, Yiwen & Greaney, Theresa M., 2017. "Economic growth and income inequality in the Asia-Pacific region: A comparative study of China, Japan, South Korea, and the United States," Journal of Asian Economics, Elsevier, vol. 48(C), pages 6-22.
    9. Arshad Ali Bhatti & M. Emranul Haque & Denise R. Osborn, 2015. "Threshold Effects of Inequality on the Process of Economic Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 205, Economics, The University of Manchester.
    10. Batuo E. Michael & George Kararach & Issam Malki, 2021. "Working Paper 353 - Inequality and the role of macroeconomic and institutional forces in Africa," Working Paper Series 2479, African Development Bank.
    11. Dong‐Hyeon Kim & Ho‐Chuan Huang & Shu‐Chin Lin, 2011. "Kuznets Hypothesis In A Panel Of States," Contemporary Economic Policy, Western Economic Association International, vol. 29(2), pages 250-260, April.
    12. Mehmet Balcilar & Rangan Gupta & Wei Ma & Philton Makena, 2021. "Income inequality and economic growth: A re‐examination of theory and evidence," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 737-757, May.
    13. Jakub Bartak & Łukasz Jabłoński, 2020. "Inequality and growth: What comes from the different inequality measures?," Bulletin of Economic Research, Wiley Blackwell, vol. 72(2), pages 185-212, April.
    14. Amarante, Veronica, 2009. "Income Inequality and Economic Growth in Latin America," Economics PhD Theses 0109, Department of Economics, University of Sussex Business School.
    15. Devdatta Ray & Mikael Linden, 2018. "Health, inequality and income: a global study using simultaneous model," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-28, December.
    16. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    17. Duc Hong Vo & Thang Cong Nguyen & Ngoc Phu Tran & Anh The Vo, 2019. "What Factors Affect Income Inequality and Economic Growth in Middle-Income Countries?," JRFM, MDPI, vol. 12(1), pages 1-12, March.
    18. Brida, Juan Gabriel & Carrera, Edgar J. Sanchez & Segarra, Verónica, 2020. "Clustering and regime dynamics for economic growth and income inequality," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 99-108.
    19. Kholeka Mdingi & Sin-Yu Ho, 2023. "Income inequality and economic growth: An empirical investigation in South Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2230027-223, June.
    20. José Carlos Coelho & José Alves, 2021. "How inequality drives growth: an investigation of the transmission channels for OECD countries," Working Papers REM 2021/0194, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

    More about this item

    Keywords

    Income inequality; economic growth; summability; balancedness; co-summability;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pre:wpaper:201763. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rangan Gupta (email available below). General contact details of provider: https://edirc.repec.org/data/decupza.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.