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Darmstadt Discussion Papers in Economics, Inst. f. VWL, TU Darmstadt >
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http://hdl.handle.net/10419/32095
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| Title: | | Economic growth and (re-)distributive policies in a non-cooperative world  |
| Authors: | | Rehme, Günther |
| Issue Date: | | 2006 |
| Series/Report no.: | | Darmstadt discussion papers in economics 175 |
| Abstract: | | Many models show that redistribution is bad for growth. This paper argues that in a non-cooperative world optimizing, redistributing (left-wing) governments mimic non-redistributing (right-wing) policies for fear of capital loss if capital markets become highly integrated and the countries are technologically similar. Left-right competition leads to more redistribution and lower GDP growth than left-left competition. Efficiency differences allow for higher GDP growth and more redistribution than ones opponent. Irrespective of efficiency differences, however, left-wing governments have higher GDP growth when competing with other left-wing governments. The results may explain why one observes a positive correlation between redistribution and growth across countries, and why capital inflows and current account deficits may be good for relatively high growth. |
| Subjects: | | Growth Distribution Tax Competition Capital Mobility |
| JEL: | | O4 H21 D33 C72 F21 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Darmstadt Discussion Papers in Economics, Inst. f. VWL, TU Darmstadt
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