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Joint determinants of fiscal policy, income inequality and economic growth

  • Muinelo-Gallo, Leonel
  • Roca-Sagalés, Oriol

This paper analyses the relationship between income inequality and economic growth through fiscal policy. To this end, we present and estimate two systems of structural equations with error components through which gross income inequality determines different fiscal policy outcomes, which subsequently affects the evolution of economic growth and net income inequality.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 30 (2013)
Issue (Month): C ()
Pages: 814-824

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Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:814-824
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  1. António Afonso & Ludger Schuknecht & Vito Tanzi, 2010. "Income distribution determinants and public spending efficiency," Journal of Economic Inequality, Springer, vol. 8(3), pages 367-389, September.
  2. Gareth D. Myles, 2009. "Economic Growth and the Role of Taxation - Aggregate Data," OECD Economics Department Working Papers 714, OECD Publishing.
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  18. Leonel Muinelo & Oriol Roca-Sagalés, 2011. "Economic Growth and Inequality: The Role of Fiscal Policies," Working Papers wpdea1105, Department of Applied Economics at Universitat Autonoma of Barcelona.
  19. Li, Hongyi & Zou, Heng-fu, 1998. "Income Inequality Is Not Harmful for Growth: Theory and Evidence," Review of Development Economics, Wiley Blackwell, vol. 2(3), pages 318-34, October.
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  26. Fölster, Stefan & Henrekson, Magnus, 1997. "Growth and the Public Sector: A Critique of the Critics," Working Paper Series 492, Research Institute of Industrial Economics, revised 10 Jun 1998.
  27. Hongyi Li & Danyang Xie & Heng-Fu Zou, 2000. "Dynamics of income distribution," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 937-961, November.
  28. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
  29. Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
  30. Torsten Persson & Gérard Roland & Guido Tabellini, 1997. "Separation of Powers and Political Accountability," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1163-1202.
  31. Avery, Robert B, 1977. "Error Components and Seemingly Unrelated Regressions," Econometrica, Econometric Society, vol. 45(1), pages 199-209, January.
  32. Gareth D. Myles, 2009. "Economic Growth and the Role of Taxation - Disaggregate Data," OECD Economics Department Working Papers 715, OECD Publishing.
  33. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
  34. Baltagi, Badi H., 1981. "Simultaneous equations with error components," Journal of Econometrics, Elsevier, vol. 17(2), pages 189-200, November.
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