@techreport{NBERw7793,
 title = "Inequality and Growth: What Can the Data Say?",
 author = "Abhijit V. Banerjee and Esther Duflo",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "7793",
 year = "2000",
 month = "July",
 URL = "http://www.nber.org/papers/w7793",
 abstract = {This paper describes the correlations between inequality and the growth rates in cross-country data.  Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: Changes in inequality (in any direction) are associated with reduced growth in the next period.  The estimated relationship is robust to variations in control variables and estimation methods.  This inverted U-curve is consistent with a simple political economy model, although, as we point out, efforts to interpret this model causally run into difficult identification problems.  We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.},
}