Endogenous distribution, politics and the growth-equity tradeoff

Satya P. Das () and Chetan Ghate
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Satya P. Das: Indian Statistical Institute, New Delhi

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: In comparison to the standard literature on inequality and growth which assumes the former to be exogenous, we formulate a model in which inequality and growth are both endogenous. Furthermore, long-run distribution, at least locally, is shown to be independent of the initial distribution of factor ownership. It is shown that exogenous policy changes that are primarily targeted towards growth and foster less inequality do enhance growth. But those that are primarily redistributive and imply more equal distribution reduce growth. This is consistent with recent empirical work which shows that inequality and growth may be positively related.

Keywords: Median Voter; Endogenous Growth; Wealth Distribution; Distributive Conflict; Redistributive Policy (search for similar items in EconPapers)
JEL-codes: D31 E62 O40 P16 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2003-09
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Journal Article: Endogenous Distribution, Politics, and the Growth-Equity Tradeoff (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:alo:isipdp:03-06

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