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Growth and distribution endogenously determined: a theoretical model and empirical evidence

Author

Listed:
  • Hernán Borrero

    (Universidad del Norte, Barranquilla, Colombia.)

  • Nestor Garza

    (California State University at Dominguez Hills, Carson – CA, United States. Nestor Garza is also associated of Universidad del Norte, Barranquilla, Colombia.)

Abstract

We build upon an already known but scarcely developed feature of growth theory: the importance of asset distribution in an aggregate production function. We elaborate on a simple model of two individuals, and then generalize its deductions to an extended model of n agents, concluding that perfectly distributed productive capital leads to positive and optimum long-run “endogenous” growth. Recent and classical empirical literature on the topic suggests this interpretation. In addition, we find exploratory panel data evidence that supports our theory of growth and distribution in a set of Latin-American countries. JEL Classification: O10; O41; O54.

Suggested Citation

  • Hernán Borrero & Nestor Garza, 2019. "Growth and distribution endogenously determined: a theoretical model and empirical evidence," Brazilian Journal of Political Economy, Center of Political Economy, vol. 39(2), pages 344-361, April.
    • Handle: RePEc:ekm:repojs:v:39:y:2019:i:2:id:95308
    DOI: 10.1590/0101-31572019-2880
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    Keywords

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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