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Linearity and causality on the dynamic relationship between income inequality and economic growth: evidence from a high income Latin American country

  • Juan Gabriel Brida [1] ; Bibiana Lanzilotta [1] ; Luciana Méndez-Errico [1]
    1. [1] Universidad de la República

      Universidad de la República

      Uruguay

  • Localización: Cuadernos de economía: Spanish Journal of Economics and Finance, ISSN 0210-0266, ISSN-e 2340-6704, Vol. 41, Nº. 117, 2018, págs. 291-300
  • Idioma: inglés
  • DOI: 10.32826/cude.v41i117.73
  • Títulos paralelos:
    • Linearidad y causalidad en la relación dinámica entre la desigualdad de ingresos y el crecimiento económico: evidencia de un país latinoamericano de altos ingresos
  • Enlaces
  • Resumen
    • español

      Este trabajo estudia la relación a largo plazo entre la desigualdad de ingresos y el crecimiento económico en Uruguay, un país latinoamericano de altos ingresos. Con este fin, se aplican técnicas de cointegración mediante el uso de test y datos no paramétricos para el período de 1986 a 2014. La linealidad de la relación se prueba previamente a la estimación de la función que relaciona estas variables, la cual muestra que se obtiene una relación lineal negativa de largo plazo entre el crecimiento del PIB real y la desigualdad. Para probar la causalidad, se realiza el procedimiento sugerido por Holmes y Hutton (1990). Los resultados encuentran que la causalidad es unidireccional y el efecto va del crecimiento económico a la desigualdad. Cuando la prueba se realiza en diferencias, se pueden identificar efectos significativos en ambas direcciones. Un shock (un aumento o disminución inesperados) en la variación de la desigualdad causa efectos en la variación del crecimiento. Se sigue que, en el corto plazo, la desigualdad puede afectar el crecimiento, pero no a largo plazo, lo que implica que el efecto en esta dirección es transitorio.

    • English

      This paper studies the long-run relationship between income inequality and economic growth in Uruguay, a high income Latin American country. Cointegration techniques are applied by using nonparametric tests and data for the period 1986 to 2014. Linearity of the relationship is tested previously to the estimation of the functional of the relationship between these variables which shows a negative linear long-run relationship between real GDP growth and inequality is obtained. To test causality, the procedure suggested by Holmes and Hutton (1990) is performed. The results find that causality is unidirectional and the effect goes from economic growth to inequality. When the test is performed in differences, significant effects can be identified in both directions. A shock (an unexpected rise or decrease) on the variation of inequality cause effects on growth variation. It follows that in the short-run inequality may affect growth, but not in the long-run, implying that the effect in this direction is transitory.

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