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Inequality, Growth and Public Spending in Central, East and Southeast Europe

  • Mario Holzner


    (The Vienna Institute for International Economic Studies, wiiw)

The paper analyses the joint determinants of inequality and growth with a special emphasis on public spending structures in transition. The mutual benefit of low real interest rates, to both equity and economic development is a major result of this paper. In terms of public spending items we find a positive correlation with equity and a negative one with growth as several of the government expenditure items seem to act counter-cyclically. In the late 1990s and early 2000s the European integration process allowed most of the transition economies to aim for the best of both worlds equity and economic development.

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Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 71.

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Length: 15 pages including 3 Tables
Date of creation: Oct 2010
Date of revision:
Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:71
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  1. Mattias Lundberg & Lyn Squire, 2003. "The simultaneous evolution of growth and inequality," Economic Journal, Royal Economic Society, vol. 113(487), pages 326-344, 04.
  2. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  3. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  4. Badi H. Baltagi & Long Liu, 2009. "A Note on the Application of EC2SLS and EC3SLS Estimators in Panel Data Models," Center for Policy Research Working Papers 116, Center for Policy Research, Maxwell School, Syracuse University.
  5. Zhang, Lei, 2008. "Political economy of income distribution dynamics," Journal of Development Economics, Elsevier, vol. 87(1), pages 119-139, August.
  6. Balestra, Pietro & Varadharajan-Krishnakumar, Jayalakshmi, 1987. "Full Information Estimations of a System of Simultaneous Equations with Error Component Structure," Econometric Theory, Cambridge University Press, vol. 3(02), pages 223-246, April.
  7. Sebastian Leitner & Mario Holzner, 2008. "Economic Inequality in Central, East and Southeast Europe," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 5(1), pages 155-188.
  8. Abhijit V. Banerjee & Esther Duflo, 2000. "Inequality and Growth: What Can the Data Say?," NBER Working Papers 7793, National Bureau of Economic Research, Inc.
  9. International Monetary Fund, 2003. "Income Inequality and Redistributive Government Spending," IMF Working Papers 03/14, International Monetary Fund.
  10. Matyas, Laszlo & Lovrics, Laszlo, 1990. "Small sample properties of simultaneous error components models," Economics Letters, Elsevier, vol. 32(1), pages 25-34, January.
  11. Baltagi, Badi H., 1981. "Simultaneous equations with error components," Journal of Econometrics, Elsevier, vol. 17(2), pages 189-200, November.
  12. Sylwester, Kevin, 2002. "Can education expenditures reduce income inequality?," Economics of Education Review, Elsevier, vol. 21(1), pages 43-52, February.
  13. Mo, Pak Hung, 2000. "Income Inequality and Economic Growth," Kyklos, Wiley Blackwell, vol. 53(3), pages 293-315.
  14. Edward Castronova, 2001. "Inequality and income: The mediating effects of social spending and risk," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(2), pages 395-415, July.
  15. Andreas Bergh & G√ľnther Fink, 2008. "Higher Education Policy, Enrollment, and Income Inequality," Social Science Quarterly, Southwestern Social Science Association, vol. 89(1), pages 217-235.
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