Income inequality and economic growth: a panel VAR approach

Atems, Bebonchu; Jones, Jason

doi:10.1007/s00181-014-0841-7

Cited by 45 publications

(41 citation statements)

References 40 publications

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“…The evolution of the empirical literature offers no consensus on the above questions (de Dominicis, Florax, and de Groot ; Neves, Afonso, and Silva ). In the U.S. context, a positive relationship between income inequality and economic growth has been found by Frank () and Partridge (, ), a negative association is supported by Panizza (), while Atems and Jones () argue that increases in inequality lead to lower income per capita in the long run.…”

Section: Introductionmentioning

confidence: 90%

“…The paper has also benefited greatly from comments received by conference participants at ISCEF 2016, IMAEF 2014, CRETE 2014, AMEF 2015, and ECINEQ 2015 The authors would also like to thank M. Frank Neves, Afonso, and Silva 2016). In the U.S. context, a positive relationship between income inequality and economic growth has been found by Frank (2009a) and Partridge (1997Partridge ( , 2005, a negative association is supported by Panizza (2002), while Atems and Jones (2015) argue that increases in inequality lead to lower income per capita in the long run. This study attempts to shed light on the above question by focusing on how physical and human capital accumulation affect the relationship between economic growth and income inequality, with emphasis on top incomes.…”

Section: Introductionmentioning

confidence: 95%

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Inequality and Growth in the United States: Why Physical and Human Capital Matter

Benos

Karagiannis²

2017

Economic Inquiry

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We investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation, using an annual panel of U.S. state‐level data. Our analysis is based upon the “unified” framework offered by Galor and Moav (2004) while the empirics account for cross‐section dependence, parameter heterogeneity, and endogeneity, in nonstationary series. We conclude that changes in inequality do not influence growth, neither in the short run nor in the long run in the United States as a whole in the 1929–2013 period. Our findings are robust to the inclusion of overall income inequality measures. These findings provide support for the theoretical prediction of the unified theory of inequality and growth, according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the United States experiences during our period of investigation. Therefore, future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the United States. (JEL I21, O47, C23)

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Section: Introductionmentioning

confidence: 90%

Section: Introductionmentioning

confidence: 95%

Inequality and Growth in the United States: Why Physical and Human Capital Matter

Benos

Karagiannis²

2017

Economic Inquiry

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“…While bivariate VAR models are commonly used in the structural VAR literature (see, e.g., Atems and Jones ; Bernanke and Blinder ; Bachmeier and Cha ), it is possible that a bivariate VAR model omits relevant information. In that case, the identified police spending shocks may be contaminated by shocks to other variables besides crime rates.…”

Section: Resultsmentioning

confidence: 99%

“…Focusing on police spending, however, provides a more comprehensive analysis of the link between police and crime because while much of any increase in police spending is 2. While no papers have applied panel SVAR models to the police-crime literature, our empirical methodology is related to several other papers that use panel SVAR methods in their analysis; examples include Love and Zicchino (2006), Ravn, Schmitt-Grohe, and Uribe (2012), Ilzetzki, Mendoza, and Végh (2013), Pedroni (2013), Atems and Jones (2015), Gnimassoun and Mignon (2016), and Atems (2018Atems ( , 2019 usually appropriated for new hires, a nontrivial amount is appropriated for equipment, technology, and support systems. Consider, for example, the Public Safety Partnership and Community Policing Act of 1994.…”

Section: Introductionmentioning

confidence: 99%

An Empirical Characterization of the Dynamic Effects of Police Spending on Violent and Property Crime

Atems

2019

Economic Inquiry

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The study estimates the dynamic effects of shocks to police expenditures on measures of violent and property crime rates using annual U.S. state‐level data for the period 1960–2015. We employ a structural panel VAR model and achieve identification by imposing the restriction that police spending responds to structural shocks to crime with at least a lag of 1 year. Results indicate that a shock to police spending leads to (a) persistent and significant decreases in violent and property crime rates and (b) significant and persistent negative impacts on crime rates in periods of high crime but little impacts in periods of low crime. Variance decompositions show that shocks to police spending account for moderate to large proportions of the variability of U.S. state‐level crime rates. Our findings are robust across separate measures of violent and property crime rates, as well as to the inclusion of additional variables to the baseline panel VAR model. (JEL K42)

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“…The net effect of a change in income inequality on the interest rate is predicted to be unambiguously negative in the model. There appears to be no equivalent study to Atems and Jones () exploring the short run effects of changes in inequality on interest rates, but Goda and Lysandrou () argue that the concentration of income and wealth among high net worth individuals depressed bond yields in the run up to the 2008 financial crisis. A similar argument has been made in recent accounts of ‘secular stagnation’ following the 2008 crisis (Summers, , p. 69).…”

Section: Is‐lm Equilibriummentioning

confidence: 99%

Inequality and Aggregate Demand in the Is‐lm and Is‐mp Models

Jump

2017

Bulletin of Econ Res

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This paper presents an extension to the textbook IS‐LM and IS‐MP models that allows the short run effects of an increase in household income inequality to be studied in a simple manner. The income distribution is assumed to be log‐normal, and the coefficient of variation of income is assumed to be exogenous. The latter is used as the measure of income inequality, and enters otherwise standard IS and LM curves in a straightforward manner. While the models are highly stylised, they can easily be extended to more complicated variants.

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Income inequality and economic growth: a panel VAR approach

Cited by 45 publications

References 40 publications

Inequality and Growth in the United States: Why Physical and Human Capital Matter

Inequality and Growth in the United States: Why Physical and Human Capital Matter

An Empirical Characterization of the Dynamic Effects of Police Spending on Violent and Property Crime

Inequality and Aggregate Demand in the Is‐lm and Is‐mp Models

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