Global inequality and growth – BNPP

FXStreet (Guatemala) – Phillippe D’Arvisenet, analyst at BNP Paribas noted that rising inequality’s moderating impact on demand can be counterbalanced by heaping on more debt, but only temporarily, as illustrated by America’s experience in the late 2000s.

Key Quotes:

“Looking beyond the impact on demand, recent literature highlights inequality’s unfavourable impact on the accumulation of human capital and thus on supply. This argues in favour of income redistribution, as long as it remains reasonable.”

“In contrast, the top 1%’s share of income distribution does not seem to harm long-term growth prospects as long as it is not linked to “seeking rent” but to the reward of successful innovation.”

Phillippe D’Arvisenet, analyst at BNP Paribas noted that rising inequality’s moderating impact on demand can be counterbalanced by heaping on more debt, but only temporarily, as illustrated by America’s experience in the late 2000s.

(Market News Provided by FXstreet)