Economic growth and (re-)distributive policies in a non-cooperative world

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Darmstadt Discussion Papers in Economics ; No. 175

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Factor Income Distribution ; Noncooperative Games ; International Investment; Long-term Capital Movements
• Subject: Growth ; Distribution ; Tax Competition ; Capital Mobility ; Wirtschaftswachstum ; Verteilungspolitik ; Steuerwettbewerb ; Internationale Kapitalmobilität ; Public Choice ; Nichtkooperatives Spiel

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rehme, Günther
• Event: Veröffentlichung
• (who): Technische Universität Darmstadt, Department of Law and Economics
• (where): Darmstadt
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/32095
• Last update: 10.03.2025, 11:43 AM CET