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Relationships between consumption and inequality in the Indian states

  • Andrew McKay

    (Nottingham University)

  • Sarmistha Pal

    (Cardiff Business School)

Current evidence on the relationships between growth and inequality is predominantly based on cross-country data sets or panel data sets covering a small number of time periods. But these relationships, being fundamentally dynamic in nature, need to be considered over a much longer time horizon. Available state level results from the National Sample Surveys in India provide such an opportunity. This paper uses this unique data set to examine the interrelationships between average consumption and inequality within states, and test for causality. Distributional patterns of growth vary, but there is strong evidence in many instances of a strong negative effect of initial inequality on subsequent growth.

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File URL: http://econwpa.repec.org/eps/dev/papers/0309/0309005.pdf
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Paper provided by EconWPA in its series Development and Comp Systems with number 0309005.

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Length: 30 pages
Date of creation: 09 Sep 2003
Date of revision:
Handle: RePEc:wpa:wuwpdc:0309005
Note: Type of Document - ; pages: 30
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Alesina, Alberto F & Rodrik, Dani, 1991. "Distributive Politics and Economic Growth," CEPR Discussion Papers 565, C.E.P.R. Discussion Papers.
  2. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-91, September.
  3. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  4. 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.
  5. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
  6. Kul Luintel, 1999. "Non-causality due to irrelevant lag polynomials," Applied Economics Letters, Taylor & Francis Journals, vol. 6(1), pages 17-20.
  7. 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.
  8. Datt, Gaurav & Ravallion, Martin, 1990. "Regional disparities, targeting, and poverty in India," Policy Research Working Paper Series 375, The World Bank.
  9. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, vol. 10(1), pages 1-25, January.
  10. Sugata Ghosh & Sarmistha Pal, 2003. "The effect of inequality on growth: Theory and evidence from the Indian states," Development and Comp Systems 0309006, EconWPA.
  11. Datt, Gaurav & Ravallion, Martin, 1998. "Why Have Some Indian States Done Better Than Others at Reducing Rural Poverty?," Economica, London School of Economics and Political Science, vol. 65(257), pages 17-38, February.
  12. Perotti, Roberto, 1993. "Political Equilibrium, Income Distribution, and Growth," Review of Economic Studies, Wiley Blackwell, vol. 60(4), pages 755-76, October.
  13. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657 Elsevier.
  14. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
  15. Ravallion, Martin, 1999. "Are poorer states worse at targeting their poor?," Economics Letters, Elsevier, vol. 65(3), pages 373-377, December.
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