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INTERNATIONAL REVIEW OF APPLIED ECONOMICS, 2025 (ESCI, Scopus)
Using panel data from 143 countries between 1960 and 2020, this paper explores the complex link between the distribution of political power and economic resources by employing panel VAR techniques. The empirical findings reveal that economic inequality and political inequality cause each other in each income group, irrespective of the level of development and democracy. The further econometric results highlight that if democracies do not spread political power more equally among all segments of the society, they cannot reduce economic inequality.