Endogenous Distribution, Politics and Growth

Satya Das () and Chetan Ghate

No 310, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper generalizes the analysis of distributive conflict, politics, and growth developed by by Alesina-Rodrik (1994). We construct a heterogenous-agent framework in which both growth and the distribution of wealth are endogenous. Due to adjustments in the distribution of wealth, the composition of factor ownership across households equalizes in the long run. This implies that the optimal tax rate is the same for all households and equals the growth maximizing tax rate. Hence, there is no distributive conflict in the long run. When the model is augmented with a non-political redistributive policy, the model predicts that long run growth exhibits a negative monotonic relationship with respect to this policy, i.e., a redistributive policy that leads to a more equitable wealth distribution unambiguously reduces growth in the long run.

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: 34 p.
Date: 2002
New Economics Papers: this item is included in nep-dev, nep-pke and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.diw.de/documents/publikationen/73/diw_01.c.38624.de/dp310.pdf (application/pdf)

Related works:
Working Paper: Endogenous Distribution, Politics, and Growth (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp310

Access Statistics for this paper

More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().