Short-Run And Long-Run Dynamics Of Growth, Inequality And Poverty In The Developing World

Growth, inequality, and poverty are central elements of the development process. However the mutual effects and directions of causality have been, and remain, one of the most controversial issues. After introducing a simple theoretical framework the authors derive some fundamental relations between growth, inequality and poverty. In the empirical part they test for unit roots and co-integration and apply GMM techniques on an Error Correction Model (ECM) to estimate the pair wise short-run and long-run dynamics for income growth and changes in inequality and poverty in a panel of 114 developing countries and six regional subpanels for 1981 to 2005.