Inequality, Redistribution, and Economic Growth

This paper provides a critical review of the recent literature on inequality and growth. After discussing historical and more recent distributional trends as well as empirical evidence on the relationship between inequality and growth, I focus on recent explanations of the inequality-growth puzzle. I consider both the impact of the functional and the personal distribution on long-run growth rates. A final section discusses a rather neglected issue in the recent literature: the impact of expected demand for innovation decisions.     

Reform,Growth, and Inequality in China*

This paper provides a survey of the literature on inequality in China – level, change, causes, and consequences. It attempts to answer six main questions. How much has inequality risen? What is its relation to poverty alleviation? What has happened to wealth inequality? What are the main dimensions of rising income inequality? The dimensions examined are: the rural–urban divide; urban labor market reform; regional divergence; rural–urban migration; and entrepreneurship, rent‐seeking, and corruption. Was it inevitable that inequality should rise so much? Does it matter that inequality has risen? Income distribution in China is bound up with both economic reform and economic growth. This paper concludes by considering the countervailing forces that will determine the path of inequality in future years.     

The Division of Labor, Inequality and Growth

We present a model that links the division of labor and economic growth with the division of wealth in society. When capital market imperfections restrict the access of poor households to capital, the division of wealth affects individual incentives to invest in specialization. In turn, the division of labor determines the dynamics of the wealth distribution. A highly concentrated distribution of wealth leads to a low degree of specialization, low productivity, and low wages. In that case workers are unable to accumulate enough wealth to invest in specialization. Hence, in a highly unequal society, there is a vicious cycle in which the degree of specialization, productivity and wages stay low, wealth and income inequality stays high and the economy stagnates. By contrast, greater equality increases investment in specialization and leads to a greater division of labor and higher long run development.     

负债制度阈值下债务结构对公司成长性的影响

在证监会IPO申请审核标准的约束下,中国存在70%和20%负债制度阈值。以2001-201 0年中国A股9860家上市公司为样本,研究发现,当负债小于20%时,长期债务或银行借款对公司增长起限制作用,而且银行借款对公司价值造成负面影响;当负债超过70%时,由于债权人的预算软约束,长期债务不减反增,助长了公司非理性高速增长,以及银行放任公司高风险高增长,造成公司价值毁损;当负债在20%与70%之间时,预算软约束状况得到改善,但负债的正面治理效应仍不显著。     

Income Distribution,Household Debt and Growth in Modern Financialized Economies

Abstract:

We analyze some core features of the institutional transformation of the Canadian and U.S. economies over the last half century, as they became increasingly financialized economies resting on household consumption as the key contributor to economic growth, despite weak growth in real wages and personal disposable income. This growth in consumption spending is highly fragile not only because it is a debt-led growth that has relied on an unsustainable expansion of household indebtedness largely dependent on credit bubbles in the housing market, but also because of the perverse form of this indebtedness. Studied from the angle of disaggregated household consumption/saving behavior, it is the poorest and most vulnerable households who have been building up unsustainable debt, thereby presaging increasing financial fragility and crises.     

Endogenous Fertility, Income Distribution, and Growth

This article analyzes the interaction between growth and fertility via income distribution in a model in which fertility decisions are motivated by old-age support. It provides an explanation of the demographic transition of an economy from a stage of increasing fertility and low growth to a stage of low fertility, high human capital investments, and high growth.     

信贷约束、再分配及不平等对增长的影响

当信贷对那些禀赋较少的当事人是完全可获取时,再分配对长期增长无影响.当信贷不可得时,再分配可以促进经济增长.富人与穷人之间的不平等程度越高,越容易刺激穷人掠夺富人的财富,并牺牲了总的投资与增长.恰当的再分配政策设计可以有利于禀赋少者并促进总的产出,并使社会朝着增长与和谐的方向努力.     

Political aspects of household finance: debt,wage bargaining,and macroeconomic (in)stability

The recent literature has shown that income inequality is one of the main causes of borrowing and debt accumulation by working households. This article explores the possibility that household indebtedness is an important cause of rising income inequality. If workers experience rising debt burdens, their cost of job loss may rise if they need labor-market income to continue borrowing and servicing existing debt. This, in turn, will reduce their bargaining power and increase income inequality, inducing workers to borrow more to maintain consumption standards, and so creating a vicious circle of rising inequality, job insecurity, and indebtedness. We believe that these dynamics may have contributed to observed simultaneous increases in income inequality and household debt prior to the recent financial crisis. To explore the two-way interaction between inequality and debt, we develop an employment rent framework that explicitly considers the impact of workers’ indebtedness on their perceived cost of job loss. This is embedded in a neo-Kaleckian macro model in which inequality spurs debt accumulation that contributes to household consumption spending and hence demand formation. Our analysis suggests that (a) workers’ borrowing behavior plays a crucial role in understanding the character of demand and growth regimes; (b) debt and workers’ borrowing behavior play an important role in the labor market by influencing workers’ bargaining power; and (c) through such channels, workers’ borrowing behavior can be a decisive factor in the determination of macroeconomic (in)stability.     

稳健财政政策下国债的适度规模与管理

2005年起,我国开始实行稳健的财政政策,经济运行方式发生了变化,国债政策作为以前积极财政政策调节经济方向的重要工具也应采取相应变化以促进经济向前发展.由此加强我国国债规模管理,不仅应从总体上缩小国债规模,更应该注重国债资金的使用效率,对其加强监督管理.     

Autonomous government expenditure growth,deficits, debt,and distribution in a neo-Kaleckian growth model

This article is linked to some recent attempts at including a noncapacity creating autonomous expenditure category as the driver and determinant of growth into Kaleckian distribution and growth models. Whereas previous contributions have focussed on taming Harrodian instability, generated by the deviation of the goods market equilibrium rate of capacity utilization from a normal or target rate, we rather focus on the so-far neglected issues of deficit, debt, and distribution dynamics in such models. For this purpose, we treat the growth of government expenditures on goods and services, financed by credit creation, as the exogenous growth rate driving the system. We examine the long-run convergence of the system toward such a growth rate, analyze the related debt dynamics, and deal with stability and income distribution issues. Finally, we touch upon the economic and, in particular, fiscal policy implications of our model results.     

Growth, income distribution, and democracy: What the data say

This paper investigates the relationship between income distribution, democratic institutions, and growth. It does so by addressing three main issues: the properties and reliability of the income distribution data, the robustness of the reduced form relationships between income distribution and growth estimated so far, and the specific channels through which income distribution affects growth. The main conclusion in this regard is that there is strong empirical support for two types of explanations, linking income distribution to sociopolitical instability and to the education/fertility decision. A third channel, based on the interplay of borrowing constraints and investment in human capital, also seems to receive some support by the data, although it is probably the hardest to test with the existing data. By contrast, there appears to be less empirical support for explanations based on the effects of income distribution on fiscal policy.     

The Corporate State,Economic Performance,and Social Policy

We use the Survey of Consumer Finances to analyze changes in U.S. household debt between 1989 and 2013. We focus on how income and debt levels have changed, and what this means for future economic growth and living standards. Prior to the Great Recession, U.S. households had record high debt levels and record low savings rates. Highly leveraged consumption boosted economic growth. However, large debt burdens have led many families to deleverage. Our study finds that deleveraging has been insufficient. Although debt payments have fallen relative to household income, this is mainly due to low interest rates. Debt levels, especially for home mortgages, remain high by historical standards and portend continued stagnation due to lower consumer spending.     

The Pro‐Poorness,Growth and Inequality Nexus: Some Findings From a Simulation Study

An income growth pattern is pro‐poor if it reduces a (chosen) measure of poverty by more than if all incomes were growing equiproportionately. Inequality reduction is not sufficient for pro‐poorness. In this paper, we explore the nexus between pro‐poorness, growth, and inequality in some detail using simulations involving the displaced lognormal, Singh–Maddala, and Dagum distributions. For empirically relevant parameter estimates, distributional change preserving the functional form of each of these three‐parameter distributions is often either pro‐poor and inequality reducing, or pro‐rich and inequality exacerbating, but it is also possible for pro‐rich growth to be inequality reducing. There is some capacity for each of these distributions to show trickle effects (weak pro‐richness) along with inequality‐reducing growth, but virtually no possibility of pro‐poorness for growth which increases overall inequality. Implications are considered.     

Demographic Transition, Income Distribution, and Economic Growth

This article investigates the dynamic interactions among demographic transition, income distribution, and economic growth. Consistent with empirical evidence we show that fertility and income distribution follow an inverted U-shaped dynamics in the process of economic development. In the first stage fertility increases and income inequality widens, whereas in the second stage fertility declines, income becomes more equally distributed, human capital becomes more abundant, and growth of income per capita takes off. The model therefore generates the documented facts about epochs of demographic transition, relying neither on arguments based on near rationality nor on noneconomic objectives.     

Public Debt,Economic Growth and the Real Interest Rate: A Panel VAR Approach to EU and OECD Countries

ABSTRACT

We investigate the causal relationship between public debt ratios and economic growth rates for 31 EU and OECD countries. We estimate a panel VAR model that incorporates the long-term real interest rate on government bonds as a vehicle to transmit shocks in both the public debt to GDP ratio and the economic growth rate. We find no causal link from public debt to growth, irrespective of the levels of the public debt ratio. Rather, we find a causal relationship from growth to public debt. In high-debt countries, the direct negative impact of growth on public debt is enhanced by an increase in the long-term real interest rate, which in its turn decreases interest-sensitive demand and leads to a further increase in the public debt ratio.     

Fiscal policy,government debt,and economic growth in the Kaleckian model of growth and distribution

This article presents the Kaleckian model of growth and distribution that sets a budget deficit ratio as an indicator of fiscal policy and examines the short- and long-run effects of an increase in budget deficits and a rise in income tax rates on the economy. The key short-run outcomes are as follows. First, expanded budget deficits have a positive effect on the rate of capacity utilization. Second, the tax rate for wage income does not affect the rate of capacity utilization, whereas the tax rate for capital income has a favorable impact on it. This result implies that raising the tax rate for capital income can be an important policy instrument for stimulating the economy. Third, we find that the economy exhibits a wage-led aggregate demand in the short run. The main long-run results are as follows. First, the effect of expanded budget deficits on the growth rate is ambiguous, since a higher debt burden negatively influences the rate of capacity utilization and hence economic growth, despite the increase in demand caused by government borrowing. A higher budget deficit ratio thus raises the growth rate only if a certain condition is satisfied. Second, the tax rate for capital income has a positive impact on the growth rate. Third, the economy shows a wage-led growth in the long run.     

教育体系、收入分布与经济增长

本文使用一个包含物质资本与人力资本积累的世代交叠模型,研究不同的教育体系对经济增长的影响.我们发现,在公立教育体系下,最优的教育投资水平高于私立教育体系,收入差异也将会比在私立教育体系下下降得更快.因此,与私立教育体系相比,公立教育体系更有利于人力资本积累,在公立教育体系下一个国家将会有更高的经济增长率与更为平等的收入分布.     

Sudden Stops,Time Inconsistency,and the Duration of Sovereign Debt

We study the sovereign debt duration chosen by the government in the context of a standard model of sovereign default. The government balances off increasing the duration of its debt to mitigate rollover risk and lowering duration to mitigate the debt dilution problem. We present two main results. First, when the government decides the debt duration on a sequential basis, sudden stop risk increases the average duration by 1 year. Second, we illustrate the time inconsistency problem in the choice of sovereign debt duration: governments would like to commit to a duration that is 1.7 years shorter than the one they choose when decisions are made sequentially.     

农民收入分配对农村经济增长作用分析

改革开放20年的实践表明，农民收入分配与农村经济增长之问是互相影响的。即在经济发展早期，收入分配不均等对经济增长具有促进作用；当经济发展进入后期，收入分配不均等就会对经济增长产生抑制作用，此时收入分配不均等的缩小可以促进经济增长。     

Growth Effects of Fiscal Policy and Debt Sustainability in the EU

In this paper we study the relationship of fiscal policy and economicperformance of some core countries in the EU. Our aim is to find outwhether public deficit and public debt have consequences for real variables in the economies we consider. The background of our empirical study is a growth model that provides us with some predictions on the relationship between fiscal policy and economic growth. In a first step we then use Granger causality tests to analyze empirically whether some of the implications of our model arecompatible with the data. In a second step, we investigate whether the fiscalpolicies of the member states have been sustainable. Given this information,we then pursue the question of whether differences in the fiscal positions ofcountries have consequences as concerns the outcome of our empirical testsof step one. Finally, we study whether the impact of the public deficit ratiodepends on the magnitude of the debt ratio.