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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. Pierre Pestieau & Emmanuel Thibault, 2012. "Love thy children or money," Economic Theory, Springer, vol. 50(1), pages 31-57, May.
  2. Strulik, Holger, 2009. "Patience and Prosperity," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover dp-426, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  3. 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.
  4. 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.
  5. Marcel Aloy & Gilles De Truchis, 2012. "Estimation and Testing for Fractional Cointegration," Working Papers halshs-00793206, HAL.
  6. 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.
  7. Kirill Borissov & Stéphane Lambrecht, 2009. "Growth and distribution in an AK-model with endogenous impatience," Economic Theory, Springer, vol. 39(1), pages 93-112, April.
  8. Joël Hellier & Stéphane Lambrecht, 2012. "Inequality, growth and welfare: The main links," Working Papers 258, ECINEQ, Society for the Study of Economic Inequality.
  9. Nathalie Chusseau & Joel Hellier, 2012. "Education, Intergenerational Mobility and Inequality," Working Papers 261, ECINEQ, Society for the Study of Economic Inequality.
  10. 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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