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Inequality and Growth: Does Time Change Anything

Author

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  • Niko Gobbin

    (Ghent University)

  • Glenn Rayp

    (Ghent University)

Abstract

The econometric analysis of economic growth has always been subject to major flaws and shortcomings. Data scarcity and reliability, parameter heterogeneity, omitted variables bias, endogeneity problems, ... have seriously tainted estimation results. In this paper we propose an alternative framework that explicitly deals with these issues. We investigate the relation between income inequality and economic growth in a number of OECD countries in a cointegrated VAR-setting. Our results suggest that different models seem to hold for different countries. However, for most countries the imperfect markets model better describes reality than the complete markets model.

Suggested Citation

  • Niko Gobbin & Glenn Rayp, 2004. "Inequality and Growth: Does Time Change Anything," Development and Comp Systems 0402005, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:0402005
    Note: Type of Document - pdf; prepared on Win2000; pages: 31; figures: Figures in document
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    References listed on IDEAS

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    Cited by:

    1. N. Gobbin & G. Rayp, 2004. "Income Inequality Data in Growth Empirics: From Cross-Sections to Time Series," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/252, Ghent University, Faculty of Economics and Business Administration.
    2. Niko Gobbin & Glenn Rayp & Dirk Van de gaer, 2007. "Inequality And Growth: From Micro Theory To Macro Empirics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(4), pages 508-530, September.

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    More about this item

    Keywords

    income inequality; economic growth; cointegrated VAR;
    All these keywords.

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Political Economy and Comparative Economic Systems

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