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Growth and distribution in an AK-model with endogenous impatience

Author

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  • Kirill Borissov

    (European University at Saint Petersburg)

  • Stéphane Lambrecht

    (EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - Université de Lille, Sciences et Technologies - Université de Lille, Sciences Humaines et Sociales - PRES Université Lille Nord de France - Université de Lille, Droit et Santé, Center for Operations Research and Econometrics CORE - UCL - Université Catholique de Louvain = Catholic University of Louvain, Université de Lille, Sciences et Technologies)

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.
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Suggested Citation

  • Kirill Borissov & Stéphane Lambrecht, 2009. "Growth and distribution in an AK-model with endogenous impatience," Post-Print hal-04279203, HAL.
  • Handle: RePEc:hal:journl:hal-04279203
    DOI: 10.1007/s00199-007-0307-7
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    1. Zur Theorie der Vermögensverteilung
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2014-06-20 14:32:00

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    Cited by:

    1. Borissov, Kirill & Surkov, Alexander, 2010. "Common and private property to exhaustible resources: theoretical implications for economic growth," MPRA Paper 27524, University Library of Munich, Germany.
    2. Joël Hellier & Stéphane Lambrecht, 2013. "Inequality, Growth and Welfare: The Main Links," Palgrave Macmillan Books, in: Joël Hellier & Nathalie Chusseau (ed.), Growing Income Inequalities, chapter 9, pages 274-311, Palgrave Macmillan.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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 2013/01, European University at St. Petersburg, Department of Economics.
    8. 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.
    9. 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.
    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.
    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. Marcel Aloy & Gilles de Truchis, 2012. "Estimation and Testing for Fractional Cointegration," Working Papers halshs-00793206, HAL.
    14. Nathalie Chusseau & Joël Hellier & B. Ben-Halima, 2013. "Education, Intergenerational Mobility and Inequality," Palgrave Macmillan Books, in: Joël Hellier & Nathalie Chusseau (ed.), Growing Income Inequalities, chapter 8, pages 227-273, Palgrave Macmillan.
    15. Borissov, Kirill & Surkov, Alexander, 2010. "Common and private property to exhaustible resources: theoretical implications for economic growth," MPRA Paper 27524, University Library of Munich, Germany.
    16. 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.
    17. Strulik, Holger, 2012. "Patience and prosperity," Journal of Economic Theory, Elsevier, vol. 147(1), pages 336-352.
    18. Borissov, K. & Pakhnin, M., 2018. "A Division of Society into the Rich and the Poor: Some Approaches to Modeling," Journal of the New Economic Association, New Economic Association, vol. 40(4), pages 32-59.
    19. Kirill Borissov & Stéphane Lambrecht, 2011. "Education, Wage Inequality and Growth," Working Papers hal-00955684, HAL.
    20. Tamotsu Nakamura, 2014. "On Ramsey's conjecture with AK technology," Economics Bulletin, AccessEcon, vol. 34(2), pages 875-884.
    21. 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.
    22. Borissov, Kirill, 2016. "The Rich And The Poor In A Simple Model Of Growth And Distribution," Macroeconomic Dynamics, Cambridge University Press, vol. 20(7), pages 1934-1952, October.

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    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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