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Threshold and interaction effects in the trade, growth, and inequality relationship

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  • Vincent Leyaro

Abstract

This paper examines the relationship between trade (exports), growth, and inequality, using a panel of 100 countries over 30 years (1980 to 2010). As there is no clear theoretical relationship between trade (exports) and inequality, and as inequality can be considered a proxy for 'governance quality', the paper also tests for a threshold in inequality for the effect of trade (exports) on growth. The findings are that in general trade openness advances growth while inequality reduces growth.

Suggested Citation

  • Vincent Leyaro, 2015. "Threshold and interaction effects in the trade, growth, and inequality relationship," WIDER Working Paper Series wp-2015-009, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2015-009
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