Zusammenfassung:
This paper develops a two-agent worker-capitalist heterogeneous household monetary Schumpeterian growth model to examine the effects of R&D and monetary policies on economic growth and inequality. The model is then calibrated to the South African economy, an upper-middle-income African country infamous for its consistently high level of inequality. A higher nominal interest rate reduces innovation and economic growth but help to mitigate inequality. However, the reduction in consumption inequality comes from a disproportionate decline in the capitalists' condition. In contrast, stronger patent protection fosters innovation and growth but leads to a greater concentration of wealth among capitalists. While broader patents provide long-term gains by boosting productivity and aggregate welfare, higher interest rates consistently decrease societal well-being despite a positive impact on distribution.