Redistribution, Inequality and Growth
IMF
Download Document| Date Published | 2014 |
| Version | |
| Primary Author | Jonathan Ostry, Andrew Berg, and Charalambos Tsangarides |
| Other Authors | |
| Theme | Housing Finance Subsidies, Housing Finance and the Economy |
| Country |
Abstract
Economists are increasingly focusing on the links between rising inequality and the fragility of growth. Narratives include the relationship between inequality, leverage and the financial cycle, which sowed the seeds for crisis; and the role of political-economy factors (especially the influence of the rich) in allowing financial excess to balloon ahead of the crisis. In earlier work, we documented a multi-decade cross-country relationship between inequality and the fragility of economic growth. Our work built on the tentative consensus in the literature that inequality can undermine progress in health and education, cause investment-reducing political and economic instability, and undercut the social consensus required to adjust in the face of shocks, and thus that it tends to reduce the pace and durability of growth.