Economic growth and income distribution in Mexico: A cointegration exercise
The empirical evidence on the relationship between income inequality and economic growth is widely recognized and, now, there are rich databases for carry on panel-data type of analyses. However, time series studies for specific countries may be more attractive and yield revealing results. For this reason, we study hereafter the long-run relationship between economic growth and income inequality in the case of Mexico. To this end, a time series of data for the Gini coefficients from Solt (2011) is used over the period 1968–2010, within a cointegration exercise. Being related to a single country, our results are suffering less from problems of heterogeneity, endogeneity, and measurement errors, which are commonly encountered in cross-country growth regressions. We first investigate (and confirm) that the two series of per capita GDP and Gini index are cointegrated. Five different methodologies are implemented in our analysis, so that the robustness of cointegration results is guaranteed. We consistently also find that the relationship between those variables is negative. Moreover, results show the per capita GDP to be weakly exogenous. According to tests for Granger causality, unidirectional causality runs from per capita GDP to the Gini index.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Hayakawa, Kazuhiko & Kurozumi, Eiji, 2008.
"The role of “leads” in the dynamic OLS estimation of cointegrating regression models,"
Mathematics and Computers in Simulation (MATCOM),
Elsevier, vol. 79(3), pages 555-560.
- Kazuhiko Hayakawa & Eiji Kurozumi, 2006. "The Role of "Leads" in the Dynamic OLS Estimation of Cointegrating Regression Models," Hi-Stat Discussion Paper Series d06-194, Institute of Economic Research, Hitotsubashi University.
- Pesaran, M. Hashem & Smith, Ron, 1995.
"Estimating long-run relationships from dynamic heterogeneous panels,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 79-113, July.
- Pesaran, M.H. & Smith, R., 1992. "Estimating Long-Run Relationships From Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics 9215, Faculty of Economics, University of Cambridge.
- Persson, Torsten & Tabellini, Guido, 1994.
"Is Inequality Harmful for Growth?,"
American Economic Review,
American Economic Association, vol. 84(3), pages 600-621, June.
- Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
- Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
- Engle, Robert & Granger, Clive, 2015.
"Co-integration and error correction: Representation, estimation, and testing,"
Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
- Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
- Stock, James H & Watson, Mark W, 1993.
"A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems,"
Econometric Society, vol. 61(4), pages 783-820, July.
- Tom Doan, . "SWDOLS: RATS procedure to estimate cointegrating vectors using dynamic OLS," Statistical Software Components RTS00207, Boston College Department of Economics.
- James H. Stock & Mark W. Watson, 1991. "A simple estimator of cointegrating vectors in higher order integrated systems," Working Paper Series, Macroeconomic Issues 91-3, Federal Reserve Bank of Chicago.
- Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
- Aghion, Philippe & Caroli, Eve & GarcÃa-PeÃ±alosa, Cecilia, 1999.
"Inequality and Economic Growth: The Perspective of the New Growth Theories,"
12502063, Harvard University Department of Economics.
- Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
- Aghion, Philippe & Caroli, Eve & Garcia-Penalosa, Cecilia, 1999. "Inequality and economic growth: the perspective of the new growth theories," CEPREMAP Working Papers (Couverture Orange) 9908, CEPREMAP.
- Dan Andrews & Christopher Jencks & Andrew Leigh, 2009.
"Do Rising Top Incomes Lift All Boats?,"
CAMA Working Papers
2009-17, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Dan Andrews & Christopher Jencks & Andrew Leigh, 2010. "Do Rising Top Incomes Lift All Boats?," CEPR Discussion Papers 641, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Andrews, Daniel & Jencks, Christopher & Leigh, Andrew, 2009. "Do Rising Top Incomes Lift All Boats?," Scholarly Articles 4415903, Harvard Kennedy School of Government.
- Andrews, Dan & Jencks, Christopher & Leigh, Andrew, 2010. "Do Rising Top Incomes Lift All Boats?," IZA Discussion Papers 4920, Institute for the Study of Labor (IZA).
- Andrews, Dan & Jencks, Christopher & Leigh, Andrew, 2009. "Do Rising Top Incomes Lift All Boats?," Working Paper Series rwp09-018, Harvard University, John F. Kennedy School of Government.
- Park, Joon Y, 1992. "Canonical Cointegrating Regressions," Econometrica, Econometric Society, vol. 60(1), pages 119-43, January.
- Davis Lewis S, 2007. "Explaining the Evidence on Inequality and Growth: Informality and Redistribution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 7(1), pages 1-35, January.
- Saikkonen, Pentti, 1992. "Estimation and Testing of Cointegrated Systems by an Autoregressive Approximation," Econometric Theory, Cambridge University Press, vol. 8(01), pages 1-27, March.
- Neil R. Ericsson & John S. Irons & Ralph W. Tryon, 2000.
"Output and inflation in the long run,"
International Finance Discussion Papers
687, Board of Governors of the Federal Reserve System (U.S.).
- Lutkepohl, Helmut & Reimers, Hans-Eggert, 1992. "Granger-causality in cointegrated VAR processes The case of the term structure," Economics Letters, Elsevier, vol. 40(3), pages 263-268, November.
- Roman Arjona & Maxime Ladaique & Mark Pearson, 2001. "Growth, Inequality and Social Protection," OECD Labour Market and Social Policy Occasional Papers 51, OECD Publishing.
- Alberto Alesina & Dani Rodrik, 1991.
"Distributive Politics and Economic Growth,"
NBER Working Papers
3668, National Bureau of Economic Research, Inc.
- Dierk Herzer & Sebastian Vollmer, 2012. "Inequality and growth: evidence from panel cointegration," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(4), pages 489-503, December.
- Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679, December.
- James G. MacKinnon & Alfred A. Haug & Leo Michelis, 1996.
"Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration,"
1996_07, York University, Department of Economics.
- MacKinnon, James G & Haug, Alfred A & Michelis, Leo, 1999. "Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(5), pages 563-77, Sept.-Oct.
- Mackinnon, J.G. & Haug, A.A. & Michelis, L., 1996. "Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration," G.R.E.Q.A.M. 96a09, Universite Aix-Marseille III.
- Peter C.B. Phillips & Mico Loretan, 1989.
"Estimating Long Run Economic Equilibria,"
Cowles Foundation Discussion Papers
928, Cowles Foundation for Research in Economics, Yale University.
- Banerjee, Abhijit V & Duflo, Esther, 2003.
"Inequality and Growth: What Can the Data Say?,"
Journal of Economic Growth,
Springer, vol. 8(3), pages 267-99, September.
- Phillips, Peter C B, 1995.
"Fully Modified Least Squares and Vector Autoregression,"
Econometric Society, vol. 63(5), pages 1023-78, September.
- Peter C.B. Phillips, 1993. "Fully Modified Least Squares and Vector Autoregression," Cowles Foundation Discussion Papers 1047, Cowles Foundation for Research in Economics, Yale University.
- Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, December.
- Bennett T. McCallum, 1983.
"On Low-Frequency Estimates of "Long-Run" Relationships in Macro- economics,"
NBER Working Papers
1162, National Bureau of Economic Research, Inc.
- McCallum, Bennett T., 1984. "On low-frequency estimates of long-run relationships in macroeconomics," Journal of Monetary Economics, Elsevier, vol. 14(1), pages 3-14, July.
- Mark W. Frank, 2009. "Inequality And Growth In The United States: Evidence From A New State-Level Panel Of Income Inequality Measures," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 55-68, 01.
- Kiviet, Jan F. & Phillips, Garry D.A., 1993. "Alternative Bias Approximations in Regressions with a Lagged-Dependent Variable," Econometric Theory, Cambridge University Press, vol. 9(01), pages 62-80, January.
- repec:idb:brikps:publication-detail,7101.html?id=26091 is not listed on IDEAS
- Niko Gobbin & Glenn Rayp, 2008. "Different ways of looking at old issues: a time-series approach to inequality and growth," Applied Economics, Taylor & Francis Journals, vol. 40(7), pages 885-895.
- Stephen Knowles, 2005.
"Inequality and Economic Growth: The Empirical Relationship Reconsidered in the Light of Comparable Data,"
Journal of Development Studies,
Taylor & Francis Journals, vol. 41(1), pages 135-159.
- Knowles, Stephen, 2001. "Inequality and Economic Growth: The Empirical Relationship Reconsidered in the Light of Comparable Data," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Ebrima A Faal, 2005. "GDP Growth, Potential Output, and Output Gaps in Mexico," IMF Working Papers 05/93, International Monetary Fund.
- Bénédicte Vidaillet & V. D'Estaintot & P. Abécassis, 2005. "Introduction," Post-Print hal-00287137, HAL.
- Shin, Inyong, 2012.
"Income inequality and economic growth,"
Elsevier, vol. 29(5), pages 2049-2057.
- Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
- Montalvo, Jose G., 1995. "Comparing cointegrating regression estimators: Some additional Monte Carlo results," Economics Letters, Elsevier, vol. 48(3-4), pages 229-234, June.
- Perotti, Roberto, 1994. "Income distribution and investment," European Economic Review, Elsevier, vol. 38(3-4), pages 827-835, April.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:35:y:2013:i:c:p:708-714. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.