IMF Working Papers

Inequality, Poverty, and Growth: Cross-Country Evidence

By Garbis Iradian

February 1, 2005

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Format: Chicago

Garbis Iradian. "Inequality, Poverty, and Growth: Cross-Country Evidence", IMF Working Papers 2005, 028 (2005), accessed April 23, 2025, https://doi.org/10.5089/9781451860474.001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the empirical relationship between inequality and growth, and analyzes the impacts of growth, inequality, and government spending on poverty reduction. A new panel dataset has been assembled on inequality and poverty that reduces measurement error and ensures comparability across countries and over time. The empirical results in this paper challenge the belief that income inequality has a negative effect on growth and confirm the validity of the Kuznets curve. Credit market imperfections in low- and medium-income countries are identified as the likely reason for the positive link between inequality and growth over the short-to-medium term. In the long term, inequality may have an adverse impact on growth.

Subject: Income distribution, Income inequality, Personal income, Poverty, Poverty reduction

Keywords: Dummy variable, Government expenditure, WP

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