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Endogenous (Re-)Distributive Policies and Economic Growth: A Comparative Static Analysis

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  • Rehme, Günther

Abstract

This paper analyzes the interplay of growth, (re-)distribution and policies when the latter are set exogenously or when the latter depend on economically important fundamentals. A redistribution policy generally causes lower growth, but less so when there is technological progress. The model implies that high (endogenous) tax rates may not necessarily imply low growth. The paper shows that the longrun cross-country relationship between growth and endogenous policy is generally not clear-cut. But this relies on conditions that can be used for identification in empirical research. The paper also argues that workers benefit more from technical progress than capital owners, even though inequality might and growth would rise.

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Bibliographic Info

Paper provided by Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL) in its series Darmstadt Discussion Papers in Economics with number 35714.

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Date of creation: May 2007
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Publication status: Published in Darmstadt Discussion Papers in Economics . 185 (2007-05)
Handle: RePEc:dar:ddpeco:35714

Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/35714/
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Keywords: Growth; Distribution; Endogenous Policy;

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References

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  9. Canton, E.J.F. & Groot, H.L.F. de & Nahuis, R., 1999. "Vested Interests and Resistance to Technology Adoption," Discussion Paper 1999-106, Tilburg University, Center for Economic Research.
  10. Rehme, Günther, 2004. "Redistribution and Economic Growth in Integrated Economies," Darmstadt Discussion Papers in Economics 21580, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
  11. Rehme, G., 2000. "Economic Growth and (Re-)Distributive Policies: A Comparative Dynamic Analysis," Economics Working Papers eco2000/13, European University Institute.
  12. Elhanan Helpman & Antonio Rangel, 1998. "Adjusting to a New Technology: Experience and Training," Harvard Institute of Economic Research Working Papers 1833, Harvard - Institute of Economic Research.
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  15. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  16. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
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  18. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
  19. Bertola, Giuseppe, 1991. "Factor Shares and Savings In Endogenous Growth," CEPR Discussion Papers 576, C.E.P.R. Discussion Papers.
  20. Stokey, Nancy L & Rebelo, Sergio, 1995. "Growth Effects of Flat-Rate Taxes," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 519-50, June.
  21. Günther Rehme, 2007. "Economic Growth and (Re-)Distributive Policies in a Non-cooperative World," Journal of Economics, Springer, vol. 91(1), pages 1-40, May.
  22. Robert E. Hall, 1988. "Intertemporal Substitution in Consumption," NBER Working Papers 0720, National Bureau of Economic Research, Inc.
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  24. William Easterly & Sergio Rebelo, 1994. "Fiscal Policy and Economic Growth: An Empirical Investigation," NBER Working Papers 4499, National Bureau of Economic Research, Inc.
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Cited by:
  1. Günther Rehme, 2011. "Endogenous Policy And Cross‐Country Growth Empirics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 262-296, 05.

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