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Immiserizing Growth in a Closed Economy

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  • Kala Krishna
  • Cemile Yavas

Abstract

We develop a model with three key features: a factor market distortion, monopoly power in the product market and indivisibilities in consumption. In this setting, multiple equilibria arise, one with high and the other with low equilibrium wages, incomes and output. It is also shown that even in a closed economy, growth may be immiserizing and, finally, that redistribution could be a "rich man's game". Copyright The editors of the "Scandinavian Journal of Economics", 2004 .

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  • Kala Krishna & Cemile Yavas, 2004. "Immiserizing Growth in a Closed Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 143-158, March.
  • Handle: RePEc:bla:scandj:v:106:y:2004:i:1:p:143-158
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