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Using the quarterly data of the United Kingdom (UK) for the period from 1975Q1 to 2016Q1, the paper analyses the dynamic and the asymmetric responses of inequality to the real gross domestic product (GDP) (income) volatility. For this purpose, we consider the bivariate Generalized Autoregressive Conditional Heteroskedasticity-in-mean (GARCH-M) Structural Vector Autoregressive (VAR) based models to examine the related relationship. Applying this method to the different measures of both income- and consumption inequality (i.e. the measures of the Gini, the standard deviation, and the 90–10 percentile differential), we find that income volatility has an increasing effect on inequality. Not only the real GDP volatility significantly increases inequality, but also its effect is asymmetric. In other words, inequality differently responds to positive and negative income growth volatility shocks. Moreover, the volatility in the GDP-inequality equation tends to amplify the positive dynamic response of inequality to a positive income shock, while diminishing the response of inequality to a negative income shock. The implications of these findings are also drawn. [ABSTRACT FROM AUTHOR]

This paper analyses patterns in regional inequality within and between Malaysia's 14 states, drawing upon estimates of Kuznets/Williamson curves, σ- and β-convergence and spatial spillovers. The path of regional inequality contradicts Kuznets predictions. Regional inequality initially fell but has subsequently risen with further economic development. While Malaysian governments have been successful at reducing poverty, they have been unable to curtail regional inequality in the long run. [ABSTRACT FROM AUTHOR]

This paper examines the impact of military expenditure on economic growth on a large balanced panel, using an exogenous growth model and dynamic panel data methods for 106 countries over the period 1988–2010. A major focus of the paper is to consider the possibility group heterogeneity and non-linearity. Having estimated the model for all of the countries in the panel and finding that military burden has a negative effect on growth in the short and long run, the panel is broken down into various groupings based upon a range of potentially relevant factors, and the robustness of the results is evaluated. The factors considered are different levels of income, conflict experience, natural resources abundance, openness and aid. The estimates for the different groups are remarkably consistent with those for the whole panel, providing strong support for the argument that military spending has adverse effects on growth. There are, however, some intriguing results that suggest that for certain types of countries military spending has no significant effect on growth. [ABSTRACT FROM PUBLISHER]

We explore the relationship between natural disasters and income inequality in Sri Lanka as the first study of this nature for the country. The analysis uses a unique panel data set constructed for the purpose of this paper. It contains district inequality measures based on household income reported in six waves of the Household Income and Expenditure Survey of Sri Lanka during the period between 1990 and 2013, data on disaster affected population and other economic and social indicators. Employing a panel fixed effects estimator, we find that contemporaneous natural disasters and their immediate lags significantly and substantially decrease inequality in per adult equivalent household income as measured by the Theil index. Findings are robust across various inequality metrics, sub-samples and alternative estimators such as Ordinary Least Squares and System GMM. However, natural disasters do not affect household expenditure inequality. Either households behave as if they have a permanent income or all households reduce their expenditure proportionately irrespective of their income level in responding to natural disasters. Natural disasters decrease non-seasonal agricultural and non-agricultural income inequality but increase seasonal agricultural income inequality. Income of richer households is mainly derived from non-agricultural sources such as manufacturing and business activities and non-seasonal agricultural activities. Poorer households have a higher share of agricultural income. [ABSTRACT FROM AUTHOR]

This paper examines how the relative shares of public and private health expenditures impact income inequality. We study a two period overlapping generation's growth model in which longevity is determined by both private and public health expenditure and human capital is the engine of growth. Increased investment in health, reduces mortality, raises return to education and affects income inequality. In such a framework we show that the cross-section earnings inequality is non-decreasing in the private share of health expenditure. We test this prediction empirically using a variable that proxies for the relative intensity of investments (private versus public) using vaccination data from the National Sample Survey Organization for 76 regions in India in the year 1986-87. We link this with region-specific expenditure inequality data for the period 1987-2012. Our empirical findings, though focused on a specific health investment (vaccines), suggest that an increase in the share of the privately provided health care results in higher inequality. [ABSTRACT FROM AUTHOR]

Abstract: This paper contributes to the debate on the relationship between human capital, institutions, and economic growth. The paper first develops a micro-foundation model linking institutions to human capital. The advantage of our modeling strategy is that the human capital accumulation function is derived from an endogenous process. The theoretical model shows that improvements in the quality of institutions foster human capital accumulation, decrease income inequality and change the historical development path. The paper uses cross-country panel data from 1965 to 2005 to test some of the model''s propositions and finds that deep structures or structural institutions – which are very persistent and rooted on the historical development path of an economy – affect long-term economic performance, while political institutions are uncorrelated with productivity and long-term economic growth. The empirical estimates also show that growth of physical and human capital – instead of levels – determines long-run economic growth. [Copyright &y& Elsevier]

The objective of this paper is to examine whether bank and stock market development contributes to reducing income inequality and poverty in emerging countries. Using dynamic panel data methods with an updated dataset for the period 1987–2011, we assess the finance–inequality–poverty nexus by taking the separate and simultaneous impacts of banks and stock markets into account. Mixed explanatory findings on panel studies suggest that although financial development promotes economic growth, this does not necessarily benefit those on low-incomes in emerging countries. For the finance–poverty link, we find that neither banks nor stock markets play a significant role in poverty reduction. [ABSTRACT FROM AUTHOR]

Abstract: This paper identifies the fiscal instruments that governments can use to promote economic growth when sociopolitical instability (SPI) is present. We show that fiscal policy that takes into account income distribution and SPI transforms a neoclassical growth model into one with both endogenous growth and a poverty trap. Under these circumstances, the growth rate of the economy depends upon SPI, fiscal policy and income distribution. The baseline level of SPI determines an economy's ability to grow. If SPI is high, the economy remains in a poverty trap even if fiscal policy instruments are set appropriately. [Copyright &y& Elsevier]

Abstract: This paper examines the long-run relationship between top income shares and economic growth for a panel of nine high-income countries over the period from 1961 to 1996. We use panel cointegration and causality techniques that are robust to omitted variables, slope heterogeneity, and endogenous variables. Our main findings are that an increase in the top decile of income share reduces growth, and that long-run causality also runs in the opposite direction—from economic growth to top income shares. [Copyright &y& Elsevier]

This paper examines the long-run (steady-state) relationship between levels of educational human capital and levels of income for the 15 major states of India between 1965 and 1992. The relationship is estimated using the Pooled Mean Groups (PMG) technique; which produces common long-run coefficients but allows heterogeneity of the short-run adjustment parameters. The results suggest that levels of educational human capital, proxied by high school enrollment rates, have a robust positive impact on steady-state levels of income. This is true for male and female education, and the regressions also suggest that states which have larger gender-gaps in education have lower steady-state incomes. The estimated relationship is robust to the inclusion of alternative measures, added controls, and variation in the degree of state coverage. [ABSTRACT FROM AUTHOR]