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Endogenous (Re-)Distributive Policies and Economic Growth: A Comparative Static Analysis

  • Rehme, Günther

This paper analyzes the interplay of growth, (re-)distribution and policies when the latter are set exogenously or when the latter depend on economically important fundamentals. A redistribution policy generally causes lower growth, but less so when there is technological progress. The model implies that high (endogenous) tax rates may not necessarily imply low growth. The paper shows that the longrun cross-country relationship between growth and endogenous policy is generally not clear-cut. But this relies on conditions that can be used for identification in empirical research. The paper also argues that workers benefit more from technical progress than capital owners, even though inequality might and growth would rise.

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Paper provided by Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL) in its series Darmstadt Discussion Papers in Economics with number 35714.

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Date of creation: May 2007
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Publication status: Published in Darmstadt Discussion Papers in Economics . 185 (2007-05)
Handle: RePEc:dar:ddpeco:35714
Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/35714/
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