Endogenous Distribution, Politics, and the Growth-Equity Tradeoff
AbstractIn comparison to the standard literature on inequality and growth which assumes the former to be exogenous, we formulate a model in which inequality and growth are both endogenous. Long-run distribution, at least locally, is shown to be independent of the initial distribution of factor ownership. It is shown that exogenous policy changes that are primarily targeted towards growth and foster less inequality do enhance growth. But policies that are primarily redistributive and imply a more equal distribution reduce growth. This is consistent with recent empirical work which shows that inequality and growth may be positively related.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.
Volume (Year): 4 (2004)
Issue (Month): 1 (July)
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Web page: http://www.degruyter.com
Other versions of this item:
- Satya P. Das & Chetan Ghate, 2003. "Endogenous distribution, politics and the growth-equity tradeoff," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 03-06, Indian Statistical Institute, New Delhi, India.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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