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Title:The political economy of growth and distribution: A theoretical critique PDF Logo
Authors:Josten, Stefan Dietrich
Truger, Achim
Issue Date:2003
Series/Report no.:WSI-Diskussionspapier 111
Abstract:This paper reconsiders the political economy approach to 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 basal models. The political economy 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:D72
D3
H2
O4
Document Type:Working Paper
Appears in Collections:WSI-Diskussionspapiere, Wirtschafts- und Sozialwissenschaftliches Institut, Hans-Böckler-Stiftung

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