INCOME DISTRIBUTION AND ECONOMIC CHANGE IN PARAGUAY, 1972–88

The author reconstructs the income distribution of families in Paraguay for 1972, 1982, and 1988 by aligning three different urban household surveys with two farm income and two land tenure studies within a national accounts framework. He finds, first, a narrowing disparity between average family incomes in agriculture and non-agriculture in the recent decade, and, second, a steady widening in the agrarian distribution in contrast to a more stable non-agricultural distribution. The "cross-over" of the Paraguayan agricultural distribution from one of greater to lesser equality than the non-agricultural distribution is also found for a number of other recent cases and confirms Kuznets' speculation about the North American data. In the Paraguay experience, the "cross-over" may be due to the deepening cleavage between the commercial minifundia and the modernizing latifundia in the areas of new settlement. Paraguay's countrywide distributions are also compared to other Latin American economies of similar income level and agricultural shares.     

A META‐ANALYSIS ON THE RELATIONSHIP BETWEEN INCOME INEQUALITY AND ECONOMIC GROWTH

In recent years there is a growing interest in determining the impact of inequality on economic growth. Theoretical papers as well as empirical applications have, however, produced controversial results. Although there is a considerable part of the literature that considers inequality detrimental to growth, more recent studies have challenged this result and found a positive effect of inequality on growth. In this paper, we provide a contribution to the empirical puzzle by using meta‐analysis to systematically describe, identify and analyse the variation in outcomes of empirical studies. We find that estimation methods, data quality and sample coverage systematically affect the results. The results point out that it will be particularly useful to increasingly focus research on determining the impact of income inequality on economic growth using single‐country data at the regional level, or a relatively homogeneous set of countries with adequate controls for country‐wide differences in economic, social and institutional characteristics.     

REVISED REAL CANADIAN GNP ESTIMATES AND CANADIAN ECONOMIC GROWTH, 1870–1926

Revised Canadian real GNP estimates for the 1870–1926 period, based on the nominal GNP estimates constructed by M. C. Urquhart and on a variety of sector-specific price indexes, are presented below. The construction of this revised real GNP series allows for the creation of real output estimates for the major sectors of the Canadian economy as well as for a new implicit price index series. These revised estimates cast new light on our present understanding of Canadian economic growth and reinforce the view that the Canadian wheat boom probably played an important and positive role in the process of Canadian economic development.     

NATIONAL ACCOUNTING AND INCOME DISTRIBUTION

Conventional national accounts are often seen as concentrating on the production process, on how goods and services are produced, rather than on consumption, or who the products serve. Production finances consumption via income generation, distribution and re-distribution. This paper demonstrates this inter-action by elaborating a full economic accounting matrix, and takes both theoretical and practical considerations into account. The aim is to explore how far the revised SNA can and should give emphasis to issues of income distribution and consumption.     

FALLING LABOR INCOME INEQUALITY IN KOREA'S ECONOMIC GROWTH: PATTERNS AND UNDERLYING CAUSES

Over the last twenty-five years, the economy of the Republic of Korea achieved a remarkable growth rate of 7 percent per year in real per capita income, causing it to be labeled, justifiably, as a miracle economy. This exceptional economic growth has beenpp accompanied by an even more exceptional fall m labor income inequality. Using a newly-developed methodology, we use data from Korea's Occupational Wage Surveys to quantify the importance of various factors that have contributed to the fall in labor income inequality in Korea. We find the most important factors explaining the level of income inequality are job tenure, gender, years of education, and occupation, while those that are most important in explaining the change in income inequality are years of education, industry, occupation, and potential experience.     

UNDERSTANDING ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT

Review of Explaining Growth: A Global Research Perspective, edited by Gary McMahon and Lyn Squire and Productivity Growth, Inflation, and Unemployment: The Collected Essays of Robert J. Gordon by Robert J. Gordon     

FOREIGN CAPITAL AND ECONOMIC GROWTH

This paper examines the economic implications of institutional arrangements by which foreign investors are required to reinvest a certain percentage of their capital within the host country. Our analysis shows that foreign capital inflow can produce long-lasting economic benefits to the host country only when the foreign capital reinvestment rate is sufficiently greater than the host country's saving rate. In this case, the economy evolves into a unique steady state equilibrium, which is also asymptotically stable. The paper also presents several comparative static results regarding the responses of steady state capital-labour ratio and the proportion of foreign capital in total capital to changes in the population growth rate, the rate of capital depreciation, the host country's saving rate and the foreign capital reinvestment rate.     

LAND PRICE,COLLATERAL AND ECONOMIC GROWTH*

This paper extends Kiyotaki and Moore's (1997 ) to an endogenous growth model and investigates the dynamic properties of a growing economy with binding credit constraint when land is used not only as an input of production but also as collateral. There exists a balanced growth path in an economy with binding credit constraint. In response to a once and for all productivity shock, the developed model shows the propagation mechanism among output, capital, bank credit and the land price in terms of the growth rate. The model's tractability allows us to derive interesting qualitative and quantitative findings on business cycles.     

NONCASH INCOME, EQUIVALENCE SCALES, AND THE MEASUREMENT OF ECONOMIC WELL-BEING

Little attention has been paid to the importance of consistency between the specifications of the income and the equivalence scales used in measuring economic well-being when noncash income is included in the definition of income. This article finds that inconsistency between the income and needs sides of a comparison can be important when some types of noncash income are included. An upward bias in the measured economic status of the aged when Medicare is included in income and an ordinary equivalence scale is used is presented as an example of the important effects of this consistency problem.     

CONSUMPTION AND LEISURE EXTERNALITIES, ECONOMIC GROWTH AND EQUILIBRIUM EFFICIENCY

This paper analyzes the effects of consumption and leisure externalities on growth and welfare in a two‐sector endogenous growth model with human capital accumulation. Both types of externalities are shown to affect the long‐run equilibrium and optimal growth rates in a rather different way. The relationship between the steady state of the market and the centrally planned economy is also analyzed. The optimal growth path can be decentralized by resorting to consumption or labor income taxation, whereas capital income should be untaxed. Numerical simulations suggest that growth and welfare effects of mild consumption and leisure externalities may be quantitatively important.     

POVERTY AND INCOME INEQUALITY IN PUERTO RICO, 1969–89: TRENDS AND SOURCES

The paper examines Puerto Rican trends in income distribution during the 1970s and 1980s, then attempts to ascertain the source of the changes in income inequality through a decomposition of the Gini coefficient by factor income source. The study finds that poverty and inequality declined unambiguously during the twenty-year period. The source of the fall in income concentration was found to have been tied, not to changes in the distribution or share of earned income, but to that of unearned income, particularly transfers. These appear to have also accounted for the decline in poverty.     

CONCEPT AND DEFINITION OF INCOME IN THE NATIONAL ACCOUNTS

It is a truism that the national accounts have engendered their own concept of income which is different from other contexts such as business accounting, taxation or welfare analysis. Less known are the principles on which this income concept is based. This article is an attempt to specify such principles, investigating in particular the role of the transaction principle, and to derive an income concept therefrom. The crucial point of the argument is whether or not it is appropriate within the system of the national accounts to assign an income to sectors other than the households. The theory is applied to some practical questions which have been discussed in the process of the revision of the SNA.     

SENIORITY WAGES AND ECONOMIC GROWTH*

Economies that lack well‐developed markets for mobilizing household savings may, in some instances, grow faster than those that are financially more developed, provided that their labour markets are also characterized by seniority rather than spot wages. This occurs because of a Kaldorian redistribution effect in a model where households have finite‐horizons and where older workers, as an endogenous feature, have higher saving rates.     

ECONOMIC GROWTH AND INCREASING HOUSE PRICES

Abstract.  Several cities and countries in Asia and North America have experienced large increases in housing prices. We extend the 1991 paper by S. Rebelo to simulate this situation. We show that growth in real housing prices can result as economic growth persists, even when population growth is zero. Another finding is that reported increases in housing prices might be underestimated. In particular, the growth rate of a relative price index may converge to zero even when house prices in real terms display sustained growth.