on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia's development and policy challenges; strengthen analytical rigor and quality of ADB's country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness.ABSTRACT v I.
ABSTRACTInclusive growth should ensure "broad-based" economic growth which characterizes the pattern of growth. Beyond simple association identification implied by the Kuznets curve and cross-country panel regression analyses, this study attempts to shed light on the dynamic causality relationship and impact channel between economic growth and inequality-using vector error correction model (VECM) and vector autoregression (VAR) models for individual economies. If growth has a negative impact on inequality, renewed attention should be paid to curbing inequality. Those economies experiencing inclusive growth can further promote growth with less risk of sacrificing equity. This also provides useful implications for development interventions through designing and monitoring projects and programs. Given the growing challenges of reducing inequality, economies could create a proper inequality target as a binding constraint in pursuing economic growth, instead of using a growth-first and redistribution-later strategy.