In macroeconomic literature, it is widely held that persuasion of economic growth and more equitable distribution of income (wealth) is not possible at the same time. The basic reason put forward is that to aim for more equitable distribution will reduce total savings in short and medium terms...

This paper analyses the relationship between income inequality and economic growth through fiscal policy. To this end, we present and estimate two systems of structural equations with error components through which gross income inequality determines different fiscal policy outcomes, which...