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Why the IMF and OECD are Wrong about Inequality and Growth

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  • Clemens Fuest
  • Florian Neumeier
  • Daniel Stöhlker

Abstract

In recent studies the IMF and the OECD claim that inequality has a negative impact on economic growth and conclude that redistribution policies have no adverse growth effects. We argue that this claim is misleading. We show that, for developed countries, the correlation between inequality and growth is positive, not negative. But this correlation cannot be given a causal interpretation.

Suggested Citation

  • Clemens Fuest & Florian Neumeier & Daniel Stöhlker, 2018. "Why the IMF and OECD are Wrong about Inequality and Growth," EconPol Policy Brief 07, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:econpb:_07
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    References listed on IDEAS

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    6. Jonathan David Ostry & Andrew Berg & Charalambos G Tsangarides, 2014. "Redistribution, Inequality, and Growth," IMF Staff Discussion Notes 14/02, International Monetary Fund.
    7. Federico Cingano, 2014. "Trends in Income Inequality and its Impact on Economic Growth," OECD Social, Employment and Migration Working Papers 163, OECD Publishing.
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