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Does the Impact of Gini Index on Growth Differ among GCC Countries ?

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  • Sbaouelgi, Jihène
  • Boulila, Ghazi

Abstract

This paper tests whether inequality and economic growth in eleven Gulf Cooperation Council (GCC) countries are cointegrated, and estimates the impact of inequality on growth in each country separately in case cointegration exists. Assuming that each country has its own inequality-growth relationship, the paper uses time series data to estimate the impact of inequality on growth individually in each GCC country by making use of single equation cointegration techniques robust to small sample sizes such as dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS) and canonical cointegration regression (CCR). Results show that the impact of inequality on growth differs among GCC countries. The paper is valuable to policy makers in GCC countries, especially the Arab Spring countries, who aim to achieve higher growth rates by improving income inequality. The paper shows whether measures aimed at ameliorating income distribution will positively or negatively affect economic growth.

Suggested Citation

  • Sbaouelgi, Jihène & Boulila, Ghazi, 2016. "Does the Impact of Gini Index on Growth Differ among GCC Countries ?," MPRA Paper 70564, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:70564
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    More about this item

    Keywords

    Gulf Cooperation Council countries (GCC); Economic growth; income inequality; Cointegration; Unit root tests;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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