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Government Debt, Income Distribution and Growth

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  • You, Jong-Il
  • Dutt, Amitava Krishna

Abstract

This paper takes up the question of whether government debt worsens the distribution of income as tax revenues from workers are used to pay for the interest on the debt held by the rich. In so doing, we develop a post-Keynesian model in which growth is determined by aggregate demand rather than by the supply of resources and income is distributed between workers who earn wages and capitalists who receive profit and interest income. Our analysis highlights the possible expansionary effect of a rise in government debt which may raise the income of the workers, and it shows that its precise effect on income inequality depends on the circumstances under which government debt rises. (c) 1996 Academic Press Limited. Copyright 1996 by Oxford University Press.

Suggested Citation

  • You, Jong-Il & Dutt, Amitava Krishna, 1996. "Government Debt, Income Distribution and Growth," Cambridge Journal of Economics, Oxford University Press, vol. 20(3), pages 335-351, May.
  • Handle: RePEc:oup:cambje:v:20:y:1996:i:3:p:335-51
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    Citations

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    Cited by:

    1. Eckhard Hein, 2018. "Autonomous government expenditure growth, deficits, debt, and distribution in a neo-Kaleckian growth model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 41(2), pages 316-338, April.
    2. Mariolis, Theodore, 2007. "Distribution and Growth in an Economy with Heterogeneous Capital and Excess Capacity," MPRA Paper 24042, University Library of Munich, Germany.
    3. Hiroshi Nishi, 2014. "Varieties of economic growth regimes, types of macroeconomic policies and policy regimes: a post-Keynesian analysis," Chapters,in: Economic Crises and Policy Regimes, chapter 5, pages 101-123 Edward Elgar Publishing.
    4. Mariolis, Theodore, 2010. "Κριτική Έκθεση του "Νόμου της Πτωτικής Τάσης του Ποσοστού Κέρδους" του K. Marx: Κατανομή Εισοδήματος, Επισώρευση Κεφαλαίου και Τεχνολογική Μεταβολή στη Μακρά Περίοδο
      [Critical Exposition
      ," MPRA Paper 22461, University Library of Munich, Germany.
    5. Mariolis, Theodore & Papoulis, Κostas, 2010. "Δυναμική Του Δημοσίου Χρέους, Οικονομική Πολιτική Και Κοινωνική Συνοχή Στην Ελλάδα: Μία Σημείωση
      [Public debt dynamics, economic policy and social cohesion in Greece: a note]
      ," MPRA Paper 28551, University Library of Munich, Germany.
    6. repec:zbw:esthes:157991 is not listed on IDEAS
    7. Codrina Rada, 2012. "The Economics of Pensions. Remarks on Growth, Distribution and Class Conflict," Working Paper Series, Department of Economics, University of Utah 2012_02, University of Utah, Department of Economics.
    8. Greg Hannsgen, 2012. "Fiscal Policy, Unemployment Insurance, and Financial Crises in a Model of Growth and Distribution," Economics Working Paper Archive wp_723, Levy Economics Institute.
    9. repec:wfo:wstudy:36801 is not listed on IDEAS
    10. Mariolis, Theodore & Papoulis, Κostas, 2010. "Δυναμική Του Χρέους, ‘Δίδυμα Ελλείμματα’ Και Διεθνής Ανταγωνιστικότητα Της Ελληνικής Οικονομίας
      [Debt dynamics, ‘twin deficits’ and international competitiveness of the Greek economy]
      ," MPRA Paper 23173, University Library of Munich, Germany.
    11. Thomas Michl, 2006. "Capitalists, workers, and the burden of debt," Review of Political Economy, Taylor & Francis Journals, vol. 18(4), pages 449-467.
    12. Greg Hannsgen & Tai Young-Taft, 2015. "Inside Money in a Kaldor-Kalecki-Steindl Fiscal Policy Model: The Unit of Account, Inflation, Leverage, and Financial Fragility," Economics Working Paper Archive wp_839, Levy Economics Institute.
    13. Greg Hannsgen, 2014. "Fiscal Policy, Chartal Money, Mark-up Dynamics and Unemployment Insurance in a Model of Growth and Distribution," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 487-523, July.
    14. Kemp-Benedict, Eric, 2014. "A Kaleckian Model with Intermediate Goods," MPRA Paper 57076, University Library of Munich, Germany.
    15. Pasquale Commendatore & Carlo Panico & Antonio Pinto, 2010. "Government Spending, Effective Demand, Distribution and Growth: A Dynamic Analysis," Chapters,in: Institutional and Social Dynamics of Growth and Distribution, chapter 6 Edward Elgar Publishing.

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