Rat Race, Redistribution, and Growth
Journal
Review of Economic Dynamics
ISSN
1094-2025
ISSN-Digital
1096-6099
Type
journal article
Date Issued
2004-10-01
Author(s)
Abstract
Introducing locally negatively interdependent preferences into a simple AK growth model easily explains the often observed insignificant or positive correlation between distortionary redistribution and growth rates. Positive capital income taxes and lump sum transfers are harmful for growth, but people rationally vote for them in order to reduce "rat race" overaccumulation. A "neutrality proposition" holds if the pivotal voter is the mean voter, as in a representative agent case, but it fails if the pivotal voter is poorer than the average citizen.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
7
Number
4
Start page
900
End page
915
Pages
16
Subject(s)
Eprints ID
222080