Widening Income Inequality Bad For Economic Growth: IMF Report
.. the same 2011 IMF report is linked in the one the bottom link is in reply to ..
The Huffington Post Bonnie Kavoussi First Posted: 09/20/11 10:34 AM ET Updated: 09/20/11 10:34 AM ET
The widening gap between the wealthy and everyone else in the United States may be hindering a broader economic recovery, according to a new study.
The study out of the International Monetary Fund .. http://www.imf.org/external/pubs/ft/fandd/2011/09/Berg.htm .. found that greater income equality positively correlates with stronger economic growth. Released in September, the study more specifically concluded that a 10 percent decrease in inequality increased the expected duration of economic growth by 50 percent.
The IMF paper, which studied a sample of countries around the world between 1950 and 2006, found that in countries with more income inequality, such as Jordan and Cameroon, the economy more frequently plunged into deeper recessions, while economic growth lasted much longer in more equal societies.
Indeed, greater levels of income equality corresponded more strongly to sustained economic growth than other economic factors, including lower debt levels, according to the report. "Sustainable economic reform," the authors write, "is possible only when its benefits are widely shared." The United States
And so long as Americans don't spend like before, the economy may not be able to fully recover. Historically the backbone of the U.S. economy, the eroding middle class has created an anemic economy .. http://www.nytimes.com/2011/09/04/opinion/sunday/jobs-will-follow-a-strengthening-of-the-middle-class.html?pagewanted=all , Berkeley labor economist Robert Reich recently wrote. He emphasized that the spending of the richest people alone is not enough to lead to "a virtuous cycle of more jobs and higher living standards."
Nobel Prize-winning economist Joseph Stiglitz agrees. "An economy in which most citizens are doing worse year after year -- an economy like America's -- is not likely to do well over the long haul," he recently wrote .. http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105 .. in Vanity Fair.
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