A Semiparametric Analysis of the Role of Inequality, Investment, and Government Expenditure in Economic Growth
نویسندگان
چکیده
The relationship between inequality, investment, and government expenditure and their impact on economic growth in a panel of countries is empirically analyzed via a fixed effects, semiparametric model. The analysis demonstrates that the marginal impact of inequality on growth is highly nonlinear, and depends critically on both the levels of investment and government expenditure. In the absence of adequate investment and/or government expenditure, higher inequality promotes growth. However, when investment and/or government expenditure is substantial, higher inequality may actually reduce growth. Apart from the impact on the relationship between inequality and growth, it appears that government expenditure and investment have important direct, nonlinear effects on growth. Moreover, there appears to be an important but limited role for government, which hinges critically on the size of investment.
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