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Growth and distribution in an AK-model with endogenous impatience

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  • Kirill Borissov

    ()

  • Stéphane Lambrecht

    ()

Abstract

This paper combines two strands of the literature on inequality and distribution issues: the classical approach, which insists on the division of society into classes characterized by different saving propensities, and the social conflict approach, which considers that inequality inflicts direct and indirect costs to economic development. An endogenous-growth model is studied. We assume that each consumer's subjective discount factor is determined endogenously and depends on economic inequality through the following two channels. On the one hand, it is positively related to the individual consumer's relative wealth. On the other hand, it is negatively affected by a simple aggregate measure of social conflict. We show that, unlike models with exogenously given discount rates, steady state equilibria in our model is indeterminate and that the set of all equilibria is acontinuum which can be parameterized by a simple index of income inequality. The growth rate is ambiguously related to the inequality index. However, under some reasonable assumptions, the growth rate dependence on this index has an inverted U-shaped form.

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 39 (2009)
Issue (Month): 1 (April)
Pages: 93-112

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Handle: RePEc:spr:joecth:v:39:y:2009:i:1:p:93-112

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Keywords: Wealth distribution; Intertemporal choice; Growth; Development; D31; D90; O10;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Zur Theorie der Vermögensverteilung
    by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2014-06-20 09:32:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Joël Hellier & Stéphane Lambrecht, 2012. "Inequality, growth and welfare: The main links," Working Papers 258, ECINEQ, Society for the Study of Economic Inequality.
  2. Marcel Aloy & Gilles de Truchis, 2012. "Estimation and Testing for Fractional Cointegration," AMSE Working Papers 1215, Aix-Marseille School of Economics, Marseille, France.
  3. Strulik, Holger, 2012. "Patience and prosperity," Journal of Economic Theory, Elsevier, vol. 147(1), pages 336-352.
  4. Nathalie Chusseau & Joël Hellier & Bassem Ben-Halima, 2012. "Education, Intergenerational Mobility and Inequality," Working Papers hal-00993472, HAL.
  5. Kirill Borissov & Alexander Surkov, 2010. "Common and private property to exhaustible resources: theoretical implications for economic growth," EUSP Deparment of Economics Working Paper Series Ec-02/10, European University at St. Petersburg, Department of Economics, revised 29 Sep 2010.
  6. Tamotsu Nakamura, 2014. "On Ramsey's conjecture with AK technology," Economics Bulletin, AccessEcon, vol. 34(2), pages 875-884.
  7. Kirill Borissov & Stéphane Lambrecht, 2011. "Education, Wage Inequality and Growth," Working Papers hal-00955684, HAL.
  8. Borissov, Kirill, 2013. "Growth and distribution in a model with endogenous time preferences and borrowing constraints," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 117-128.
  9. Kirill Borissov, 2013. "The existence of equilibrium paths in an AK-model with endogenous time preferences and borrowing constraints," EUSP Deparment of Economics Working Paper Series Ec-01/13, European University at St. Petersburg, Department of Economics.
  10. Pierre Pestieau & Emmanuel Thibault, 2012. "Love thy children or money," Economic Theory, Springer, vol. 50(1), pages 31-57, May.
  11. BORISSOV, Kirill & LAMBRECHT, Stéphane, 2007. "Growth and distribution in an AK-model with endogenous impatience," CORE Discussion Papers 2007044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Cecilia García-Peñalosa & Stephen J. Turnovsky, 2012. "Income Inequality, Mobility, and the Accumulation of Capital. The role of Heterogeneous Labor Productivity," AMSE Working Papers 1216, Aix-Marseille School of Economics, Marseille, France.

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