EconTR 2024 V. International Conference on Economics, İstanbul, Türkiye, 16 - 18 Mayıs 2024, ss.40-41
This
paper extends the investigation of global consumption inequality through
empirical and theoretical analyses using the Penn World Tables 10.01 dataset
from 1970 to 2019. Initially, countries are categorized into five distinct
groups according to their consumption levels to illustrate global consumption
patterns and the persistence of consumption inequality over time. Our findings
reveal that countries in the lowest class struggle to ascend to higher
consumption groups. At the same time, those in the top tier maintain their
status across decades. The paper delves into the theoretical implications of
savings rate differences among these groups, guided by the Solow-Swan model,
which traditionally posits that higher savings rates facilitate improvements in
per capita consumption and overall economic growth. By expanding this analysis,
the paper incorporates Pasinetti's (1962) argument that higher savings rates
among the poor might disproportionately benefit the wealthy, thereby
exacerbating rather than easing income inequality. This inclusion challenges
traditional economic views that uniformly advocate for higher savings to
promote equitable growth. This theoretical discourse sheds light on how savings
behaviors can impact economic classes differently, highlighting the complex
interplay between macroeconomic policies and their socio-economic consequences.
By comparing these models, the study seeks to enrich the dialogue on economic
development strategies and provide a more comprehensive understanding of how
savings rates affect consumption patterns and economic stratification globally.
JEL
codes: E21, O47, C21
Keywords:
Consumption-Saving, Solow Growth Model, Demand-led Growth Models,
Cross-Sectional Models.