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A heterogeneous-agent model of growth and inequality for the UK - what has caused the UK's growth collapse since 2008?

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Abstract

This paper builds on Yang et al. (2021). This analysed the effect on UK economic growth of wealth inequality and tax or regulative disincentives to entrepreneurs, over recent decades with a heterogeneous-agent growth model where agents can enhance individual productivity growth by undertaking entrepreneurship. In this further note we update the study with the latest data and also examine how far recent policies have contributed to the collapse in UK growth since 2008. The model is estimated and tested by indirect inference, with data updated to 2024. The model explains the UK rise in growth after the 1970s and its recent collapse in terms of changing disincentives to entrepreneurs.

Suggested Citation

  • Minford, Patrick & Zhu, Zheyi, 2026. "A heterogeneous-agent model of growth and inequality for the UK - what has caused the UK's growth collapse since 2008?," Cardiff Economics Working Papers E2026/6, Cardiff University, Cardiff Business School, Economics Section.
    • Handle: RePEc:cdf:wpaper:2026/6
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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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