The aim of this work is to analyze the relationship between inequality and economic growth. The results obtained by previous empirical papers were mixed. Authors such as Persson and Tabellini (1991) or Alesina and Rodrik (1994), in fact, find evidence of a negative relationship between the two...

This paper shows that the explanation of the decline in the volatility of GDP growth since the mid-eighties is not the decline in the volatility of exogenous shocks but rather a change in their propagation mechanism.