Inequality and the duration of growth

Jonathan D. Ostry
2015 European Journal of Economics and Economic Policies: Intervention  
The relationship between income inequality and economic growth is complex. Some inequality is integral to the effective functioning of a market economy and the incentives needed for investment and growth. But inequality can also be destructive to growth, for example by amplifying the risk of crisis or making it difficult for the poor to invest in education. This paper finds that the duration of growth spells is robustly associated with more equality in the income distribution. Inequality
more » ... . Inequality matters, moreover, even when other determinants of growth durationexternal shocks, initial income, institutional quality, openness to trade, and macroeconomic stabilityare taken into account.
doi:10.4337/ejeep.2015.02.01 fatcat:5awaqvs6urayzauhae42hghs6u