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Growth and distribution in an AK-model with endogenous impatience

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  • BORISSOV, Kirill
  • LAMBRECHT, Stéphane

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

Abstract

This paper combines two strands of the literature on inequality and distribution issues: the classical approach, which insists on the division of society into classes characterized by different saving propensities, and the social conflict approach, which considers that inequality inflicts direct and indirect costs to economic development. An endogenous-growth model is studied. We assume that each consumer's subjective discount factor is determined endogenously and depends on economic inequality through the following two channels. On the one hand, it is positively related to the individual consumer's relative wealth. On the other hand, it is negatively affected by a simple aggregate measure of social conflict. We show that, unlike models with exogenously given discount rates, steady state equilibria in our model is indeterminate and that the set of all equilibria is acontinuum which can be parameterized by a simple index of income inequality. The growth rate is ambiguously related to the inequality index. However, under some reasonable assumptions, the growth rate dependence on this index has an inverted U-shaped form.

Suggested Citation

  • BORISSOV, Kirill & LAMBRECHT, Stéphane, 2007. "Growth and distribution in an AK-model with endogenous impatience," CORE Discussion Papers 2007044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2007044
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    Cited by:

    1. Kirill Borissov & Mikhail Pakhnin, 2018. "Economic growth and property rights on natural resources," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 423-482, March.
    2. Marcel Aloy & Gilles De Truchis, 2012. "Estimation and Testing for Fractional Cointegration," Working Papers halshs-00793206, HAL.
    3. Kirill Borissov & Alexander Surkov, 2010. "Common and Private Property to Exhaustible Resources: Theoretical Implications for Economic Growth," EUSP Department of Economics Working Paper Series Ec-02/10, European University at St. Petersburg, Department of Economics, revised 29 Sep 2010.
    4. Strulik, Holger, 2012. "Patience and prosperity," Journal of Economic Theory, Elsevier, vol. 147(1), pages 336-352.
    5. Nathalie Chusseau & Joël Hellier & Bassem Ben-Halima, 2012. "Education, Intergenerational Mobility and Inequality," Working Papers hal-00993472, HAL.
    6. Joël Hellier & Stéphane Lambrecht, 2012. "Inequality, growth and welfare: The main links," Working Papers 258, ECINEQ, Society for the Study of Economic Inequality.
    7. Becker, Robert A. & Borissov, Kirill & Dubey, Ram Sewak, 2015. "Ramsey equilibrium with liberal borrowing," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 296-304.
    8. Cecilia García-Peñalosa & Stephen J. Turnovsky, 2012. "Income Inequality, Mobility, and the Accumulation of Capital: The Role of Heterogeneous Labor Productivity," Working Papers halshs-00793209, HAL.
    9. Borissov, Kirill, 2013. "Growth and distribution in a model with endogenous time preferences and borrowing constraints," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 117-128.
    10. Kirill Borissov, 2013. "The Existence of Equilibrium Paths in an AK-model with Endogenous Time Preferences and Borrowing Constraints," EUSP Department of Economics Working Paper Series Ec-01/13, European University at St. Petersburg, Department of Economics.
    11. Noritaka Maebayashi & Kunihiko Konishi, 2016. "Sustainability of the public debt and wealth inequality in a general equilibrium model," Discussion Papers in Economics and Business 16-33, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    12. Kirill Borissov & Alexander Surkov, 2012. "Public versus Private Ownership of Exhaustible Resources in Models of Economic Growth with Heterogeneous Consumers," DEGIT Conference Papers c017_046, DEGIT, Dynamics, Economic Growth, and International Trade.
    13. Kirill Borissov & Stéphane Lambrecht, 2011. "Education, Wage Inequality and Growth," Working Papers hal-00955684, HAL.
    14. Kirill Borissov & Stéphane Lambrecht, 2009. "Growth and distribution in an AK-model with endogenous impatience," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 39(1), pages 93-112, April.
    15. Tamotsu Nakamura, 2014. "On Ramsey's conjecture with AK technology," Economics Bulletin, AccessEcon, vol. 34(2), pages 875-884.
    16. Pierre Pestieau & Emmanuel Thibault, 2012. "Love thy children or money," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(1), pages 31-57, May.

    More about this item

    Keywords

    wealth distribution; intertemporal choice; growth; development;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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