The effects of inequality on growth: a survey of the theoretical and empirical literature

Basically, the extensive theoretical and empirical literature on the interactions between growth/development and distribution can be divided into two main approaches. The first one examines the impact of economic development on income distribution in a long run perspective. The second one focuses on the inverse causality between inequality and growth. This paper aims at reviewing this second view about the effects of initial inequality of income and wealth on future growth rate. The theoretical literature suggests several channels through which inequality might be harmful for growth, namely three economic explanations (the channel of the capital market imperfections, the approach of endogenous fertility, the argument relating to the domestic market size) and two politico-economic arguments (the approach of endogenous fiscal policy and the political instability channel). The following conclusions can be drawn from our survey of the empirical studies regarding the relationship between inequality and growth: first, only the endogenous fertility approach and the explanation based on political instability receive convincing support from the data. Second, initial inequality of assets has a negative and significant effect on subsequent growth. As a result, wealth redistribution is likely to enhance future growth.Inequality; Growth

Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies

This paper focuses on the sources and consequences of the instability of tax revenue in Sub-Saharan African countries. We take advantage of a unique and extraordinarily rich dataset on the composition of tax revenues for a large number of countries. Using panel data for 39 countries observed over the period 1980-2005, our results are threefold. Firstly, the instability of government tax revenue leads to an instability of both the public investment and government consumption, and finally, reduces the level of public investment. Secondly, foreign aid inflows appear to be an effective insurance mechanism against the instability of tax revenue by lowering the sensitivity of public investment with respect to tax revenue shocks. Finally, the reliance on domestic indirect taxation-based systems seems more stabilizing than the dependency on trade tax revenue.Tax Instability;Tax Composition;public spending;foreign aid;Sub-Saharan Africa

Commodity price volatility and Tax revenues: Evidence from developing countries

The recent boom and bust in commodity prices has renewed the policymakers’ interest in three complementary issues: i) characteristics and determinants of commodity price instability, ii) its macroeconomic effects and, iii) the optimal policy responses to this instability. This work falls within the scope of studies dedicated to the macroeconomic effects of commodity price instability, but focuses on the impact on public finance, while existing works were concentrated on growth. This paper also differs from the few previous studies on two aspects. First, we test the impact of commodity price volatility rather than focusing only on price levels. Second, we use disaggregated data on tax revenues (income tax, consumption tax and international trade tax) and on commodity prices (agricultural products, minerals and energy) in order to identify transmission channels between world prices and public finance variables. Our empirical analysis is carried out on 90 developing countries over 1980-2008. We compute an index which measures the volatility of the international price of 41 commodities in the sectors of agriculture, minerals and energy. We find robust evidence that tax revenues in developing countries increase with the rise of commodity prices but that they are hurt by the volatility of these prices. More specifically, price short-run volatility of imported commodities hurts tax revenues through trade and consumption taxes, while price medium-run volatility of export hurts tax revenues through both indirect and direct taxes. These findings point at the detrimental effect of commodity price volatility on developing countries public finances and highlight further the importance of finding ways to limit this price volatility and to implement policy measures to mitigate its adverse effects.Price Volatility, Primary Commodities, Tax Revenues, Developing economies.

Assessing the relationship between democracy and domestic taxes in developing countries

To what extent differences across developing countries in their domestic tax mobilization can be explained, in addition to the traditional determinants, by political economy factors and particularly by the political regime? Using a panel of 66 developing countries over the period 1990-2005, this paper provides econometric evidence that democracy matters for achieving higher domestic tax revenues which are much needed to finance public goods. It is especially the level of constraints on the executive which is of importance to counter the government's propensity to cave in for special interests and to be insufficiently welfare minded. We found that high levels of democracy are specifically needed in natural resource rich countries to make natural resource rents contribute to higher domestic tax revenues and no longer be an impediment to a sustained tax system.Tax Revenues;democracy;developing countries

The Political Economy Determinants of Domestic Tax Mobilization in Developing Countries

To what extent differences across developing countries in their domestic tax mobilization can be explained, in addition to the traditional determinants, by political economy factors and particularly by the political regime? Using a panel of 78 developing countries over the period 1990-2005, this paper provides econometric evidence that democracy matters for achieving higher domestic tax revenues which are much needed to finance public goods. It is especially the level of constraints on the executive which is of importance to counter the government's propensity to cave in for special interests and to be insufficiently welfare minded. We found that high levels of democracy are specifically needed in natural resource rich countries to make natural resource rents contribute to higher domestic tax revenues and no longer be an impediment to a sustained tax system. --Revenue Performance,Democracy,Developing Countries

Deficit, Seigniorage and the Growth Laffer Curve in developing countries

The endogenous growth literature has established the existence of an inverted-U curve between taxes and economic growth, namely a Growth Laffer Curve (GLC). We develop a growth model with public investment as the engine of perpetual growth, and look for the effect of deficit, tax and money financing on economic growth. We study in particular the way fiscal and monetary policies (through deficit and seigniorage respectively) deform the GLC. An empirical section based on a panel of developing countries provides GMM-system estimators that support our theoretical conclusions.Growth Laffer Curve;deficit;seigniorage;developing countries;GMM;panel data

Cellular distribution and amount of chromogranin A in bovine endocrine pancreas

We determined the cellular distribution and the amount of chromogranin A in endocrine cells of bovine pancreas using a polyclonal antibody against bovine adrenomedullary chromogranin A. The relative amounts of chromogranin A in the different cells of the endocrine pancreas were determined by computer-assisted analyses of the optical densities of the immunoreactivities in the stained sections. More than 80% of the immunoreactive chromogranin A was located in the pancreatic B-cells. In immunoblots of acid tissue extracts, only one chromogranin A band (MW 74 KD) was observed. Quantification of the immunoblots revealed that 3 micrograms of chromogranin A and 918 micrograms of insulin were present per gram pancreas (wet weight), equivalent to a molar ratio of 460 mumol chromogranin A per mol insulin

Asymptotically maximal families of hypersurfaces in toric varieties

A real algebraic variety is maximal (with respect to the Smith-Thom inequality) if the sum of the Betti numbers (with $\mathbb{Z}_2$ coefficients) of the real part of the variety is equal to the sum of Betti numbers of its complex part. We prove that there exist polytopes that are not Newton polytopes of any maximal hypersurface in the corresponding toric variety. On the other hand we show that for any polytope $\Delta$ there are families of hypersurfaces with the Newton polytopes $(\lambda\Delta)_{\lambda \in \mathbb{N}}$ that are asymptotically maximal when $\lambda$ tends to infinity. We also show that these results generalize to complete intersections.Comment: 18 pages, 1 figur

Croissance, redistribution et lutte contre la pauvreté : l’évolution non linéaire de l’approche de la Banque mondiale

Cet article passe en revue 60 années d’activités de la Banque mondiale, en mettant l’accent sur les variations dans le temps de son attitude face au combat contre la pauvreté. Durant les années cinquante et soixante, la Banque mondiale considérait que le meilleur moyen de lutter contre la pauvreté consistait à créer les conditions d’une croissance la plus forte possible en procédant à des investissements lourds dans les infrastructures physiques. Toutefois, devant la persistance de la pauvreté de masse et de fortes inégalités dans bon nombre de pays en développement malgré des performances assez satisfaisantes en termes de croissance, la Banque mondiale plaça, dès la fin des années soixante, et pour la première fois, « la guerre contre la pauvreté » au centre de son agenda puis elle s’efforça d’élaborer, pendant les années soixante-dix, de nouvelles stratégies de croissance qui soient plus favorables pour les pauvres. Sous l’ère de l’ajustement structurel, la vision de la Banque mondiale a connu également de nombreuses modifications. Durant la première moitié des années quatre-vingt, dans un contexte de crise de la dette, la Banque mondiale a été conduite à reléguer l’objectif de réduction de la pauvreté au second plan, au profit de la restauration des équilibres macroéconomiques et du potentiel de croissance des pays en difficulté. Cependant, en réponse à la critique des coûts sociaux de ses programmes d’ajustement, l’institution financière internationale a réaffirmé son engagement à lutter contre la pauvreté en accordant, dès la fin des années quatre-vingt, une plus grande importance aux conséquences sociales de l’ajustement à court terme et surtout en proposant par la suite de nouvelles stratégies de lutte contre la pauvreté à long terme.This article reviews sixty years of the activity of the World Bank, by stressing the variations over time of its attitude with regard to the fight against poverty. Indeed, during the 1950s and 1960s, the World Bank considered that the best means of fighting poverty consisted in creating the conditions of the fastest possible growth by carrying out heavy investments in physical infrastructures. However, faced with the persistence of mass poverty and high inequalities in a great number of developing countries despite rather satisfactory performances in terms of growth, at the end of the 1960s the World Bank put for the first time the “war against poverty” at the centre of its agenda. Then during the 1970s it endeavoured to work out new growth strategies which are more favourable for the poor. Under the era of structural adjustment, the vision of the World Bank changed in many respects. During the first half of the 1980s, in a context of the debt crisis, the World Bank was led to put aside the objective of poverty reduction to favour the recovery of macroeconomic balances and the potential of growth of countries in difficulty. However, in response to criticism concerning the social costs of its adjustment programs, the international financial institution, at the end of the 1980s, reaffirmed its commitment to reduce poverty by giving greater importance to the social effects of short-term adjustment and proposing afterwards new strategies towards long-term poverty reduction