ISSN:
1573-7020
Keywords:
growth
;
inequality
;
political economy
;
income distribution
;
political effect
;
threshold effect
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract This article studies the political economy of inequality and growth by combining the political economy approach with an imperfect capital market assumption. In the present model, there emerges a class of individuals whose members do not invest privately beyond the state-financed schooling, due to their initial wealth constraint. We show that inequality affects private investment not only through the political effect, which relates inequality to private investment negatively, but also through what we call the threshold effect, which associates inequality to private investment positively. In general, private investment and inequality do not show a monotone negative relationship.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1023/A:1009762720862
