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Title:Inequality, Politics, and Economic Growth : Three Critical Questions on Politico-Economic Models of Growth and Distribution PDF Logo
Authors:Josten, Stefan Dietrich
Truger, Achim
Issue Date:2003
Series/Report no.:Diskussionspapier / Helmut-Schmidt-Universität Hamburg, Fächergruppe Volkswirtschaftslehre 3
Abstract:This paper questions the three standard propositions used by politico-economic models of growth and distribution according to which (1) rising inequality induces more government redistribution; (2) more government redistribution is financed by higher distortionary taxation; and (3) higher distortionary taxes reduce economic growth. We present a variety of theoretical arguments demonstrating that all three propositions may be overturned by simply changing an assumption in a plausible way or adding a relevant real-world element to the basic models. The politico-economic models of growth and distribution, as well as the specific inequality-growth transmission channel they propose, must therefore be assessed as overly simplistic and inadequate with respect to the issues studied.
Subjects:Political Economy
Redistribution
Inequality
Economic growth
JEL:D3
H2
O4
D72
Persistent Identifier of the first edition:urn:nbn:de:gbv:705-opus-1316
Document Type:Working Paper
Appears in Collections:Diskussionspapiere, Fächergruppe VWL, Helmut-Schmidt-Universität

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