Transitional Dynamics in a Growth Model with Distributive Politics

This paper constructs a heterogenous agent model of endogenous distribution and growth. When the labor leisure choice of agents is exogenous, the factor holding ratios of households converges to a mass point that is independent of the initial distribution of capital in the steady state. There is complete equality and every household's preferred tax rate equals the growth maximizing tax rate. There is no distributive con.ict in the long run. When the labor leisure choice of households is endogenous, there is also complete convergence in the factor holding ratios of agents in the steady state. However, the tax rate under majority voting is less than the growth maximizing tax rate which leads to distributive con.ict in the long run. These results extend the model of endogenous distribution and growth in Das and Ghate (2004) in two ways. First, we assess the impact of redistributive politics on growth by looking at the e.ect of income inequality on the tax rate and labor supply. Second, the model is solved using a more empirically plausible speci.cation of the government budget constraint in which households vote over the tax rate on capital income instead of a tax on wealth. The general insight gained from the analysis is that characterizing the transitional dynamics in a model of redistributive politics and growth is not an intractable proposition.Distributive conflict; Endogenous distribution; Median voter theorem; Endogenous growth

Transitional dynamics in a growth model with distributive politics

This paper constructs a heterogenous agent model of endogenous distribution and growth. When the labor leisure choice of agents is exogenous, the factor holding ratios of households converges to a mass point that is independent of the initial distribution of capital in the steady state. There is complete equality and every household's preferred tax rate equals the growth maximizing tax rate. There is no distributive con.ict in the long run. When the labor leisure choice of households is endogenous, there is also complete convergence in the factor holding ratios of agents in the steady state. This implies that there is unanimity over preferred tax rates as in the previous case, although the preferred tax rate of households is less than the growth maximizing tax rate. We identify the intuition behind this result. Our results also extend the model of endogenous distribution and growth in Das and Ghate (2004) in two ways. First, we assess the impact of redistributive politics on growth by looking at the e.ect of income inequality on the tax rate and labor supply. Second, the model is solved using a more empirically plausible speci.cation of the government budget constraint in which households vote over the tax rate on capital income instead of a tax on wealth. The general insight gained from the analysis is that characterizing the transitional dynamics in a model of redistributive politics and growth is not an intractable proposition.Distributive Conflict, Endogenous Distribution, Median Voter Theorem, Endogenous growth

Correlates of statewise participation in the great Indian growth turnaround: some preliminary robustness results

This short note provides some supplementary analysis to the regressions in Section 5 of Ghate and Wright (forthcoming), that was carried out after the refereeing process for that paper was completed, and hence could not be included in the published version. It is not a free-standing paper, but is intended to be read in conjunction with the published paper

Reductions of Galois representations for slopes in (1,2)(1,2)

We describe the semi-simplification of the mod $p$ reduction of certain crystalline two dimensional local Galois representations of slopes in the interval $(1,2)$ and all weights. The proof uses the mod $p$ Local Langlands Correspondence for $GL_2(Q_p)$. We also give a complete description of the submodules generated by the second highest monomial in the mod $p$ symmetric power representations of $GL_2(F_p)$.Comment: 41 page

V-Factor: Distribution, timing and correlates of the the great Indian growth turnaround

The ratio of Indian to US per capita output over the past 45 years has displayed a distinctive "V"-shaped pattern. We show that a strikingly similar V-shaped pattern is visible not just in aggregate output figures, but also as the primary determinant of long-term movements in the cross-sectional distribution within the All-India total, at both sectoral and state output levels. We also carry out preliminary investigations of correlates of the "VFactor", using a new panel data set for Indian states from 1960 to 2005 that extends and encompasses all previous datasets relevant to macroeconomic analysis of the Indian states.Principal Components, Convergence, Divergence, Indian states

The Welfare State, Thresholds, and Economic Growth

Can a growing welfare state induce a regime switch in the growth rate of an econ-omy? This paper constructs a dynamic political economy model of economic growth and the welfare state in which both variables are non-linearly related and jointly en-dogenous. Using a Markov switching framework over the period 1950-2001, we find that the structural decline in growth rates that several welfare state economies expe-rienced during 1970-1975 are preceded by movements to a high welfare state regime. This suggests that expanding welfare state regimes are associated with low economic growth regimes, while contracting welfare state regimes are associated with high growth regimes. However, we also find that the structural decline in growth rates leads to a downward structural break in the welfare state for many welfare state economies. This suggests that declining growth regimes are associated with contracting welfare state regimes, as lower growth forces politicians to cut the size of the welfare state. We also report strong evidence that both expansion and contractions in the welfare state affects growth non-linearly. These results are able to characterize a predictable and general pattern of welfare state-growth evolution.Welfare state; Structural change; Regime switching models; Positive political economy; Endogenous growth

The "V-Factor": Distribution, Timing and Correlates of the Great Indian Growth Turnaround

The ratio of Indian to US per capita output over the past 45 years has displayed a distinctive "V"-shaped pattern. We show that a strikingly similar V-shaped pattern is visible not just in aggregate output .figures, but also as the primary determinant of long-term movements in the cross-sectional distribution within the All-India total, at both sectoral and state output levels. We also carry out preliminary investigations of correlates of the "V-Factor", using a new panel data set for Indian states from 1960 to 2005 that extends and encompasses all previous datasets relevant to macroeconomic analysis of the Indian states.Principal components, divergence, Indian States