We show that the way individual income data should be aggregated into an index of inequality in order to explain countries' growth performance is theory specific. A simulation set‐up shows that the use of a wrong measure might obscure the inequality–growth relationship and that the relative performance of different measures of inequality can be informative about the channel through which inequality influences economic growth.
On 17 August 1998 the Russian authorities devalued the ruble, suspended repayments of ruble-denominated government paper and announced a moratorium on the Russian foreign debt. By doing so the government brought the domestic banking sector to the edge of bankruptcy and risked losing the little international faith still remaining in its abilities to restructure the economy. In this article we examine the deeper causes of the crisis. After having analysed its antecedents we gather our new insights into a basic stylised model of the crisis. The outcome of the model is then linked to the actual data and events.
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