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Mohammad Mahdi Bargi Oskooee; Mohammad Khodaverdizadeh; Saber Khodaverdizadeh; Ali Vafamand
Volume 7, Issue 27 , July 2017, , Pages 65-80
Abstract
This paper investigates the threshold effects of income inequality on economic growth in developing countries for the period of 2000 to 2012, using Panel Smooth Transition Regression (PSTR) model. The linearity test results indicate strongly nonlinear relationship among variables under consideration. ...
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This paper investigates the threshold effects of income inequality on economic growth in developing countries for the period of 2000 to 2012, using Panel Smooth Transition Regression (PSTR) model. The linearity test results indicate strongly nonlinear relationship among variables under consideration. Moreover, considering one transition function and one threshold parameter, as a two regime model, is sufficient to specification of nonlinear relationship among variables.The results indicate thatthreshold value for developing countries is 0.43 and the estimated slopeparameter is 0.35. In the first regime the impact of income inequality is positive and in the second regime has a negative impact on economic growth. human capital in the both regimes has symmetric and consistent effect on economic growth. Other results indicate that population growth and trade openness had been asymmetric effect on economic growth in the both regimes.
