Cover of EconPol Policy Brief 7

Why the IMF and OECD are Wrong about Inequality and Growth

Clemens Fuest, Florian Neumeier and Daniel Stöhlker
Abstract

In recent studies the IMF and the OECD claim that inequality has a negative impact on economic growth and conclude that redistribution policies have no adverse growth effects. We argue that this claim is misleading. We show that, for developed countries, the correlation between inequality and growth is positive, not negative. But this correlation cannot be given a causal interpretation.

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Citation

Clemens Fuest, Florian Neumeier and Daniel Stöhlker, "Why the IMF and OECD are Wrong about Inequality and Growth", EconPol Policy Brief 7, May 2018.