Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18049
Authors: 
Das, Satya Prasanna
Ghate, Chetan
Year of Publication: 
2002
Series/Report no.: 
DIW Discussion Papers 310
Abstract: 
This paper generalizes the analysis of distributive con?ict, politics, and growth developed by by Alesina-Rodrik (1994). We construct a heterogenous-agent framework in which both growth and the distribution of wealth are endogenous. Due to adjustments in the distribution of wealth, the composition of factor ownership across households equalizes in the long run. This implies that the optimal tax rate is the same for all households and equals the growth maximizing tax rate. Hence, there is no distributive con?ict in the long run. When the model is augmented with a non-political redistributive policy, the model predicts that long run growth exhibits a negative monotonic relationship with respect to this policy, i.e., a redistributive policy that leads to a more equitable wealth distribution unambiguously reduces growth in the long run.
Subjects: 
Median Voter
Endogenous Growth
Wealth Distribution
Distributive Conflict
Redistributive Policy
JEL: 
E62
D31
P16
O40
Document Type: 
Working Paper

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