Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

Equality and Economic Growth - Banking - Lecture Slides, Slides of Banking and Finance

Banking is an ever green field of study. In these slides of Banking, the Lecturer has discussed following important points : Equality and Economic Growth, The Landscape, Investment, Education, Sources of Growth, Scheme of Things, Investment, Growth Is Exogenous, Stable Politics, Initial Income

Typology: Slides

2012/2013

Uploaded on 07/29/2013

sathyanarayana
sathyanarayana 🇮🇳

4.4

(21)

140 documents

1 / 22

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
Education, Social
Equality, and
Economic
Growth: A View
of the Landscape
Docsity.com
pf3
pf4
pf5
pf8
pf9
pfa
pfd
pfe
pff
pf12
pf13
pf14
pf15
pf16

Partial preview of the text

Download Equality and Economic Growth - Banking - Lecture Slides and more Slides Banking and Finance in PDF only on Docsity!

Education, Social

Equality, and

Economic

Growth: A View

of the Landscape

The Scheme of Things:

Sources of Growth

Investment Education

Growth

+ denotes a positive effect in the direction shown

The Scheme of Things:

More Sources of Growth

Investment x Education

Growth

+ denotes a positive effect in the direction shown

The Scheme of Things:

More Sources of Growth

Investment x Education

Growth

+ denotes a positive effect in the direction shown

Arthur Lewis: x is trade, stable politics, good weather Then Solow came along and said: growth is exogenous

The Scheme of Things:

Inflation and Growth

Investment

Initial Income Natural Capital

Inflation Education

Growth

+ denotes a positive effect in the direction shown

- denotes a negative effect in the direction shown

My first x was inflation (1976, 1991, 1996, 2001)

The Scheme of Things:

Resources and Growth

Investment

Initial Income Natural Capital

Inflation Education

Growth

The Scheme of Things:

Aid and Growth

Investment

Initial Income Natural Capital

Foreign Aid Education

Growth

A new x will be foreign aid vs. FDI (with Radetzki et al.)

- (^)

The Scheme of Things:

Inequality and Growth

Investment

Initial Income Natural Capital

Inequality Education

Growth

Today x is inequality (with Zoega)

-

Background

Commonly held view:

Economic efficiency and social equality are incompatible, like oil and water

Okun’s “big trade-off”

Redistribution is costly  Blunts incentives to work and save and invest in education  Leaky-bucket analogy

Background: More

recent arguments

1. Political economy

Inequality may trigger demands for redistribution that hurts growth It may also trigger demands for more and better education that helps growth

2. Social cohesion

Inequality may lead to social conflict and political instability that hinder growth It may also lead to economic volatility

Research strategy

Study 87 industrial and developing

countries from 1965 to 1998

Look for cross-country patterns in data

from the World Bank

Inequality and growth Inequality and education Education and growth

Dig deeper through regression analysis

Inequality and economic

growth

75 countries

What is the empirical evidence?

y = -0,0799x + 2, R^2 = 0,

0

2

4

6

0 20 40 60 80

Gini coefficient

Per capita economic growth 1965-98, adjusted for

initial income

A 12 point increase in the Gini index goes along with a decrease in per capita growth by nearly 1% per year.

r = rank correlation

r = -0.

The Gini index and the

20/20 ratio

The Gini index is closely related to the

20/20 ratio

 Gini = 25 ⇒ ratio = 3 (Nordic countries)  Gini = 30 ⇒ ratio = 4 (Germany, Greece)  Gini = 35 ⇒ ratio = 6 (Britain)  Gini = 40 ⇒ ratio = 8 (US, China, Russia)  Gini = 50 ⇒ ratio = 15 (Nigeria)  Gini = 60 ⇒ ratio = 26 (Brazil)

Each ten-point increase in the Gini index

roughly doubles the 20/20 ratio

Education and inequality:

The missing link?

Now consider the linkages between

inequality and different measures of

education

The aim is to see if such linkages can

help explain the observed cross-

country pattern of inequality and

economic growth