Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/32095
Authors: 
Rehme, Günther
Year of Publication: 
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 one's 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

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