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Endogenous Redistributive Cycles An Overlapping Generations Approach to Social Conflict and Cyclical Growth

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  • Christiane Clemens

    ()
    (Economics Department, University of Hannover)

  • Maik Heinemann

    ()
    (Institute of Economics, University of Lüneburg)

Abstract

This paper discusses the emergence of endogenous redistributive cycles in a stochastic growth model with incomplete asset markets and heterogeneous agents, where agents vote on the degree of progressivity in the tax-transfer-scheme. The model draws from Bénabou (1996) and ties the bias in the distribution of political power to the degree of inequality in the society, thereby triggering redistributive cycles which then give rise to a nonlinear, cyclical pattern of savings rates, growth and inequality over time.

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Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 5.

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Length: 30 pages
Date of creation: 17 Mar 2005
Date of revision:
Handle: RePEc:lue:wpaper:5

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Related research

Keywords: Inequality; growth; political cycles; redistribution; Hopf bifurcation;

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