Summary of Testing Piketty’s Hypothesis on the Drivers of Income Inequality

Evidence from Panel VARs with Heterogeneous Dynamics


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Testing Piketty’s Hypothesis on the Drivers of Income Inequality summary
A new study challenges the findings of Capital in the Twenty-First Century.


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Income inequality is a concern around the world. Experts and policy makers from both the right and the left vigorously debate what, if anything, to do about it. Economist Thomas Piketty offered a big-picture analysis of the issue in his best-selling Capital in the Twenty-First Century, in which he found that wealth begets greater wealth, worsening inequality. Economist Carlos Góes attempts to tease out the validity of Piketty’s thesis and arrives at a different conclusion. getAbstract recommends his innovative but esoteric effort to ground Piketty’s historical observations in contemporary data.

In this summary, you will learn

  • Why new research undermines part of Thomas Piketty’s central thesis,
  • Whether inequality arises from shocks to the relationship between returns and growth, and
  • What other causes might explain income inequality.


Thomas Piketty’s innovative and influential book Capital in the Twenty-First Century has had a sizable impact on economic research. Its premise is that “whenever the difference between the returns on capital ( r) and the output growth rate ( g) increases, the share of capital...
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About the Author

Carlos Góes is a research analyst at the International Monetary Fund.

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