Political party negotiations, income distribution, and endogenous growth

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

This paper examines the determination of the rate of growth in an economy in which two political parties, each representing a different social class, negotiate the magnitude and allocation of taxes. Taxes may increase growth if they finance public services, but reduce growth when used to redistribute income between classes. The different social classes have different preferences about growth and redistribution. The resulting conflict is resolved through the tax negotiations between political parties. I use the model to obtain empirical predictions and policy lessons about the relationship between economic growth and income inequality.

Original languageEnglish (US)
Pages (from-to)227-255
Number of pages29
JournalJournal of Monetary Economics
Volume41
Issue number2
DOIs
StatePublished - Feb 27 1998
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • Bargaining
  • C78
  • D78
  • E62
  • Economic growth
  • Political economy

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