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IMF Economic Review

, Volume 65, Issue 4, pp 792–815 | Cite as

Inequality and Unsustainable Growth: Two Sides of the Same Coin?

  • Andrew G. Berg
  • Jonathan D. OstryEmail author
POLICY CORNER

Abstract

The relationship between income inequality and economic growth is complex and the evidence mixed. This paper focuses on the connections between income inequality and the fragility of economic growth. We find that longer growth spells—periods of strong, healthy, per capita growth—are robustly associated with more equality in the income distribution, even when controlling for a range of other standard determinants. A key implication is that it would be a gamble to think that distribution will take care of itself provided policy makers steadfastly pursue growth. Over longer horizons, avoiding excessive inequality and sustaining economic growth may be two sides of the same coin.

JEL

O1 O4 

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Copyright information

© International Monetary Fund 2017

Authors and Affiliations

  1. 1.Institute for Capacity DevelopmentInternational Monetary FundWashingtonUSA
  2. 2.Research DepartmentInternational Monetary FundWashingtonUSA

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