Income Disparity and Economic Growth: Evidence from China
AbstractThis paper carries out a pilot empirical study on how income inequality affects growth and the macro economy by means of incorporating panel data information into a macro-econometric model. China is used as the pilot field. Provincial urban and rural household data are used to construct inequality measures, which are then used to augment household consumption equations in the ADB China model. Model simulations are performed to study the effect of inequality on GDP growth and its sectoral components. Results show that inequality is a robust explanatory variable of consumption and that the way inequality develops over time carries certain negative consequences on GDP and sectoral growth.
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Bibliographic InfoPaper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 548.
Date of creation: Nov 2005
Date of revision:
Income inequality; Growth; Econometric model; China;
Find related papers by JEL classification:
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- D3 - Microeconomics - - Distribution
- C5 - Mathematical and Quantitative Methods - - Econometric Modeling
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-12 (All new papers)
- NEP-CNA-2005-11-12 (China)
- NEP-DEV-2005-11-12 (Development)
- NEP-GEO-2005-11-12 (Economic Geography)
- NEP-SEA-2005-11-12 (South East Asia)
- NEP-TRA-2005-11-12 (Transition Economics)
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