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Inequality and GDP Per Capita: The Role of Initial Income

September 14, 2017

World Bank-University of Malaya Joint Seminar

  • We estimate a panel model where the relationship between inequality and GDP per capita depends on countries' initial incomes. Estimates of the model show that the relationship between inequality and GDP per capita is significantly decreasing in countries' initial incomes. Results from instrumental variables regressions show that in Low Income Countries transitional growth is boosted by greater income inequality.

    In High Income Countries inequality has a significant negative effect on transitional growth. For the median country in the world, with a year 2015 PPP GDP per capita of around 10000USD, IV estimates predict that a 1 percentage point increase in the Gini coefficient decreases GDP per capita growth over a 5-year period by over 1 percentage point; the long-run effect on the level of GDP per capita is around -5 percent.

    Download the paper

  • Markus Brueckner

    Professor, Research School of Economics, Australian National University

    Markus Brueckner is Professor in the Research School of Economics of the Australian National University. He is an Australian Research Council Future Fellow. At RSE he heads the Economics Program of the Institute of Advanced Studies. Markus's research interests are in the fields of macroeconomics, international economics, and political economy. He has published widely in leading international journals and regularly acts as a referee in the peer review process of these journals. His research has been featured in Bloomberg, Financial Times, New York Times, Wall Street Journal, and the Economist. Markus has been engaged in numerous consulting projects for the International Monetary Fund and the World Bank. Engagements with Commonwealth Departments include a role as Macroeconomic Advisor at the Australian Treasury. As a member of a team put together by the Australian Department of Foreign Affairs and Trade, he gave lectures on the macroeconomic management of natural resources at the Africa Training Institute.

Event Details

  • WHEN: Thursday, September 14, 2017; 12:30-2:00PM
  • WHERE: Postgraduate Conference Room, Postgraduate Building, Faculty of Economics & Administration, University of Malaya
  • RSVP: Kindly RSVP by Wednesday, September 13, 2017