Pay low-income families more to boost economic growth, says IMF

Study indicates stagnating incomes of the poor and middle classes could have been instrumental in the financial crisis

The idea that increased income inequality makes economies more dynamic has been rejected by an International Monetary Fund study, which shows the widening income gap between rich and poor is bad for growth.

A report by five IMF economists dismissed "trickle-down" economics, and said that if governments wanted to increase the pace of growth they should concentrate on helping the poorest 20% of citizens.

Raising the income share of the poor and ensuring that there is no hollowing-out of the middle class is good for growth