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Public Capital, Redistribution and Growth in A Two‐Class Economy
Author(s) -
Tavani Daniele,
Zamparelli Luca
Publication year - 2016
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12105
Subject(s) - economics , endogenous growth theory , redistribution (election) , growth model , unemployment , public capital , income shares , redistribution of income and wealth , capital accumulation , macroeconomics , monetary economics , income distribution , public investment , market economy , fiscal policy , human capital , inequality , mathematical analysis , mathematics , politics , political science , law
We develop a growth model with a productive and redistributive role for the public sector in a two‐class economy. We focus on two different model closures: a Classical‐Marxian one, which produces endogenous growth, and a Post‐Keynesian one where growth is exogenous. When growth is endogenous, the policy maker fixes the long run accumulation rate and the after tax income shares. In the exogenous growth model, the government determines the after tax income shares and the unemployment compensation. In both cases, the policy choice is compared to a benchmark scenario involving no redistribution.