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GROWTH, INEQUALITY, AND ECONOMIC FREEDOM: EVIDENCE FROM THE U.S. STATES
Author(s) -
Bjørnskov Christian
Publication year - 2017
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12199
Subject(s) - economics , inequality , economic freedom , economic inequality , argument (complex analysis) , consumption (sociology) , panel data , demographic economics , labour economics , econometrics , sociology , market economy , mathematical analysis , social science , biochemistry , chemistry , mathematics
This article returns to the discussion of how income inequality affects economic growth. The main argument of the article is that economic freedom is likely to mediate the association between inequality and growth. In a panel of 300 observations from six 5‐year periods across the 50 U.S. states, I employ five different measures of inequality. The results show that across measures, the growth effects of inequality turn more positive with more economic freedom. The moderating effects are mainly driven by measures of public sector consumption. ( JEL O11, O38, O43, P48)