INEQUALITY REDUCTION = INCREASED GROWTH = IMF STUDY PROVES
Countries that redistributive WEALTH to REDUCE inequality do grow MORE rapidly than those that don’t.
IMF Research data shows tackling inequality INCREASES growth.
IMF research, “Redistribution, Inequality, and Growth,” posted on IMP’s Web site and authorized for distribution by Olivier Blanchard, the IMF’s chief economist.
LOGICAL VIIEW: “The Price of Inequality,” (by Stiglitz) threatens not just economic growth but the very fabric of democracy.
MULTINATIONAL VIEW = Raising taxes on the rich KILLS incentives which is counterproductive.
Authors = Ostry, Berg, and Tsanarides = Previous empirical findings = LESS INEQUALITY = MORE Sustained economic growth but “Taxes and transfers may be precisely the wrong remedy.”
Authors exploit a new dataset on level of “market inequality” in a given country and the level of inequality after taxes and transfers = Difference between two types of inequality = Measure of how much redistribution is being carried out
Authors Analyze relationship between redistribution and growth rates = Reducing inequality = Pro-growth = Negative relationship between GINI Inequality and GDP growth = CHALLENGES BS that countries reducing inequality pay a price in terms of lower growth. = “We should not assume that there is a big tradeoff between redistribution and growth: the best available macro-data do not support that conclusion.”
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