The Poverty-Growth-Inequality Triangle
Transcript The Poverty-Growth-Inequality Triangle
The Poverty-GrowthInequality Triangle
Asian Development Bank
• Inequality = f (growth, poverty) => Kuznets
• Poverty = f (growth, inequality) => the DattRavallion decomposition
• Growth = f (inequality, poverty)
Point 1: The Datt-Ravallion Decomposition
Useful, but not insightful enough =>
saying growth is good & inequality is bad
for poverty reduction means little to policy
What growth and what to redistribute?
physical capital, information, basic
services, or ….
Wan (2008), Oxford University Press
Point 2: Growth-Inequality Modeling
A serious and unsettled policy issue: does
inequality hurt growth and in what time
A chicken-egg problem for policy makers
=> Simultaneous equations modeling
Time horizon (Wan et al, JCE 2006):
Short-, Medium- and Long-run
What level of inequality is good???