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DISTRIBUTIONAL CONFLICT, POLITICAL CYCLES AND GROWTH
Author(s) -
CLEMENS CHRISTIANE,
HEINEMANN MAIK
Publication year - 2005
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2005.00456.x
Subject(s) - economics , endogenous growth theory , inequality , asset (computer security) , growth model , distribution (mathematics) , politics , macroeconomics , market economy , political science , mathematical analysis , mathematics , computer security , computer science , law , human capital
This paper discusses the emergence of endogenous redistributive cycles in a stochastic growth model with incomplete asset markets and heterogeneous agents who vote on the degree of progressivity in the tax‐transfer scheme. The model draws from Bénabou (in B. S. Bernanke and J. J. Rotemberg (eds), NBER Macroeconomics Annual , Vol. 11, Cambridge, MA, MIT Press, pp. 11–74) and ties the bias in the distribution of political power to the degree of inequality in the society, thereby triggering redistributive cycles which then give rise to a nonlinear, cyclical pattern of savings rates, growth and inequality over time.