Working Paper
Why the IMF and OECD are Wrong about Inequality and Growth
Clemens Fuest, Florian Neumeier, Daniel Stöhlker
ifo Institute, Munich, 2018
EconPol Policy Brief 07
ifo Institute, Munich, 2018
EconPol Policy Brief 07
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.