Lecture+8 - Poverty and Inequality First to edit Click...

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Click to edit Master subtitle style 5/10/10 Poverty and Inequality First Lecture
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5/10/10 Five Key Questions How do poverty and inequality affect prospects for economic growth and development? How should we measure poverty and inequality? How does inequality change as an economy grows? Which groups are overrepresented
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5/10/10 How Does Inequality Affect Growth? Savings Lewis model: the rich save and invest, Not clear that the raw quantity of investment is a major driver of long-run growth Also, the rich do not necessarily save more than the middle class
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5/10/10 How Does Inequality Affect Growth? Economic Liberalism High inequality may indicate an environment where individuals receive the returns to their own investments E.g., low taxes, low business regulation If liberal economic policies are good for growth, we might expect unequal societies to grow faster
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5/10/10 How Does Inequality Affect Growth? Credit Constraints In a perfect market, the best ideas get implemented no matter who has them If credit markets are imperfect, the poor may be unable to make the investments needed to implement the best ideas Meanwhile, the rich may make mediocre investments because they have no better use for their money
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This note was uploaded on 05/02/2010 for the course ECON Econ 311 taught by Professor Schnabl during the Spring '10 term at University of Delaware.

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Lecture+8 - Poverty and Inequality First to edit Click...

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