Income inequality and growth: A regime-switching approach
AbstractThis paper explores the methodology of regime-switching in the analysis of the income inequality-economic growth relationship. The underlying idea is that when some income determinant passes a certain threshold introduces a new relationship between inequality and income and/or income determinants. There are three implications of the estimated models. First, inequality decreases with economic growth when government consumption as share of GDP is ‘low’. Second, in a ‘low’ inflation environment government consumption increases inequality. Third, in countries with ‘strict’ rule of law openness to international trade and government consumption are associated with lower inequality, while financial development implies higher inequality.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0406.
Length: 8 pages
Date of creation: 02 Feb 2004
Date of revision:
Kuznets curve; regime-switching; growth determinants; thresholds;
Find related papers by JEL classification:
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bruno, Michael & Ravallion, Martin & Squire, Lyn, 1996. "Equity and growth in developing countries : old and new perspectives on the policy issues," Policy Research Working Paper Series 1563, The World Bank.
- Klaus Deininger & Lyn Squire, 1996.
"A New Data Set Measuring Income Inequality,"
CEMA Working Papers
512, China Economics and Management Academy, Central University of Finance and Economics.
- Hansen, Bruce E., 1999.
"Threshold effects in non-dynamic panels: Estimation, testing, and inference,"
Journal of Econometrics,
Elsevier, vol. 93(2), pages 345-368, December.
- Bruce E. Hansen, 1997. "Threshold effects in non-dynamic panels: Estimation, testing and inference," Boston College Working Papers in Economics 365, Boston College Department of Economics.
- Tom Doan, . "RATS programs to replicate Hansen's example of threshold break in panel data," Statistical Software Components RTZ00088, Boston College Department of Economics.
- Tom Doan, . "PANELTHRESH: RATS procedure to analyze up to two threshold breaks in a fixed effects panel model," Statistical Software Components RTS00152, Boston College Department of Economics.
- Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999.
"A Data Set on Income Distribution,"
CEMA Working Papers
575, China Economics and Management Academy, Central University of Finance and Economics.
- Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
- Dollar, David & Kraay, Aart, 2002.
" Growth Is Good for the Poor,"
Journal of Economic Growth,
Springer, vol. 7(3), pages 195-225, September.
- T. Paul Schultz, 1998.
"Inequality in the distribution of personal income in the world: How it is changing and why,"
Journal of Population Economics,
Springer, vol. 11(3), pages 307-344.
- Schultz, T.P., 1998. "Inequality in the Distribution of Personal Income in the World: How It Is Changing and Why," Papers 784, Yale - Economic Growth Center.
- Terasvirta, T & Anderson, H M, 1992. "Characterizing Nonlinearities in Business Cycles Using Smooth Transition Autoregressive Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(S), pages S119-36, Suppl. De.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kostis Pigounakis).
If references are entirely missing, you can add them using this form.