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Growth and distribution in an AK-model with endogenous impatience

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  • BORISSOV, Kirill
  • LAMBRECHT, Stéphane

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

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

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2007044.

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Date of creation: 01 Jul 2007
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Handle: RePEc:cor:louvco:2007044

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Keywords: wealth distribution; intertemporal choice; growth; development;

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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
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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. Strulik, Holger, 2009. "Patience and Prosperity," Hannover Economic Papers (HEP) dp-426, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  3. Cecilia García-Peñalosa & Stephen J. Turnovsky, 2012. "Income Inequality, Mobility, and the Accumulation of Capital: The Role of Heterogeneous Labor Productivity," Working Papers halshs-00793209, HAL.
  4. Borissov, Kirill & Surkov, Alexander, 2010. "Common and private property to exhaustible resources: theoretical implications for economic growth," MPRA Paper 27524, University Library of Munich, Germany.
  5. Nathalie Chusseau & Joel Hellier, 2012. "Education, Intergenerational Mobility and Inequality," Working Papers 261, ECINEQ, Society for the Study of Economic Inequality.
  6. 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.
  7. BORISSOV, Kirill & LAMBRECHT, Stéphane, . "Growth and distribution in an AK-model with endogenous impatience," CORE Discussion Papers RP -2134, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Tamotsu Nakamura, 2014. "On Ramsey's conjecture with AK technology," Economics Bulletin, AccessEcon, vol. 34(2), pages 875-884.
  9. Kirill Borissov, 2011. "Growth and Distribution in a Model with Endogenous Time Peferences and Borrowing Constraints," DEGIT Conference Papers c016_073, DEGIT, Dynamics, Economic Growth, and International Trade.
  10. Marcel Aloy & Gilles de Truchis, 2012. "Estimation and Testing for Fractional Cointegration," AMSE Working Papers 1215, Aix-Marseille School of Economics, Marseille, France.
  11. Pierre Pestieau & Emmanuel Thibault, 2012. "Love thy children or money," Economic Theory, Springer, vol. 50(1), pages 31-57, May.
  12. Kirill Borissov & Stéphane Lambrecht, 2011. "Education, Wage Inequality and Growth," Working Papers hal-00955684, HAL.

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