A BEJM Contributions article.

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. 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 policies that are primarily redistributive and imply a more equal distribution reduce growth. This is consistent with recent empirical work which shows that inequality and growth may be positively related.

Submitted: January 30, 2004 · Accepted: June 22, 2004 · Published: July 8, 2004

Originally published in Contributions to Macroeconomics.

Recommended Citation

Das, Satya P. and Ghate, Chetan (2004) "Endogenous Distribution, Politics, and the Growth-Equity Tradeoff," Contributions to Macroeconomics: Vol. 4 : Iss. 1, Article 6.
Available at: http://www.bepress.com/bejm/contributions/vol4/iss1/art6