Abstract:
This study aims to analyze the relationship between income distribution and economic growth. It also investigates any certain level of income distribution which provides maximum economic growth. The Gini coefficients and GDP growth rates of 105 countries are used to test the relationship. A linear and a nonlinear regression models are used on cross-country data. Both regression results indicates a significant relation between two variables. The Gini coefficient for optimal income distribution which maximize economic growth is 43,6.
