by On VoxEU, Torben Andersen and Jonas Maibom point out that empirical findings of a positive correlation between efficiency and equity need not contradict elementary theoretical predictions. The trade-off [between efficiency and equity] applies at the frontier of the possibility set of combinations of economic performance and income equality available to policy makers. If policies and institutions are ‘well-designed’, the country is at the frontier. There is no free lunch and a trade-off inevitably arises. However, there may be many historical, institutional and political reasons why countries are not at the frontier. … in which case there is scope for improvements in both economic performance and income equality. This insight leaves one important message.
Topics:
Dirk Niepelt considers the following as important: Efficiency, equity, Frontier, Notes
This could be interesting, too:
Dirk Niepelt writes Budgetary Effects of Ageing and Climate Policies in Switzerland
Dirk Niepelt writes SNB Annual Report
Dirk Niepelt writes Banks and Privacy, U.S. vs Canada
Dirk Niepelt writes Bank of England CBDC Academic Advisory Group
On VoxEU, Torben Andersen and Jonas Maibom point out that empirical findings of a positive correlation between efficiency and equity need not contradict elementary theoretical predictions.
The trade-off [between efficiency and equity] applies at the frontier of the possibility set of combinations of economic performance and income equality available to policy makers. If policies and institutions are ‘well-designed’, the country is at the frontier. There is no free lunch and a trade-off inevitably arises.
However, there may be many historical, institutional and political reasons why countries are not at the frontier. … in which case there is scope for improvements in both economic performance and income equality.
This insight leaves one important message. In cross-country comparisons … differences in the distance to the frontier should be accounted for …