We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline

https://www.econstor.eu/bitstream/10419/81822/1/02-28.pdf

Economic growth and income inequality

The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray. Part of the problem is due to Smith’s "veil of ignorance": individuals unknowingly pursue society’s interest and, as a result, have no clue as to the macroeconomic effects of their actions: witness the Keynes and Leontief multipliers, the concept of value added, fiat money, Engel’s law and technical progress, to name but a few of the macrofoundations of microeconomics. A good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan’s economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker’s Rule. Very simply, the banks, whose lending determined deposits after Roosevelt, and were a public service became private enterprises whose deposits determine lending. These underlay the great moderation preceding 2006, and the subsequent crash.

The Economic Institutions of Capitalism

This is a review of Collected Works of John Tate. Parts I, II, edited by Barry Mazur and Jean-Pierre Serre. American Mathematical Society, Providence, Rhode Island, 2016. For several decades it has been clear to the friends and colleagues of John Tate that a “Collected Works” was merited. The award of the Abel Prize to Tate in 2010 added impetus, and finally, in Tate’s ninety-second year we have these two magnificent volumes, edited by Barry Mazur and Jean-Pierre Serre. Beyond Tate’s published articles, they include five unpublished articles and a selection of his letters, most accompanied by Tate’s comments, and a collection of photographs of Tate. For an overview of Tate’s work, the editors refer the reader to [4]. Before discussing the volumes, I describe some of Tate’s work. 1. Hecke L-series and Tate’s thesis Like many budding number theorists, Tate’s favorite theorem when young was Gauss’s law of quadratic reciprocity. When he arrived at Princeton as a graduate student in 1946, he was fortunate to find there the person, Emil Artin, who had discovered the most general reciprocity law, so solving Hilbert’s ninth problem. By 1920, the German school of algebraic number theorists (Hilbert, Weber, . . .) together with its brilliant student Takagi had succeeded in classifying the abelian extensions of a number field K: to each group I of ideal classes in K, there is attached an extension L of K (the class field of I); the group I determines the arithmetic of the extension L/K, and the Galois group of L/K is isomorphic to I. Artin’s contribution was to prove (in 1927) that there is a natural isomorphism from I to the Galois group of L/K. When the base field contains an appropriate root of 1, Artin’s isomorphism gives a reciprocity law, and all possible reciprocity laws arise this way. In the 1930s, Chevalley reworked abelian class field theory. In particular, he replaced “ideals” with his “idèles” which greatly clarified the relation between the local and global aspects of the theory. For his thesis, Artin suggested that Tate do the same for Hecke L-series. When Hecke proved that the abelian L-functions of number fields (generalizations of Dirichlet’s L-functions) have an analytic continuation throughout the plane with a functional equation of the expected type, he saw that his methods applied even to a new kind of L-function, now named after him. Once Tate had developed his harmonic analysis of local fields and of the idèle group, he was able prove analytic continuation and functional equations for all the relevant L-series without Hecke’s complicated theta-formulas. Received by the editors September 5, 2016. 2010 Mathematics Subject Classification. Primary 01A75, 11-06, 14-06. c ©2017 American Mathematical Society

The collected works

Начала политической экономии и податного обложения = The principles of political economy and taxation

Using the Keynesian theory of effective demand, this paper demonstrates how particular models, such as that of "cooperative capitalism" enunciated by the left Keynesian social democrats, the Marxian model of "profit squeeze" emphasizing distributive conflict, and even the conservative model relying on "supply side" stimulus, fit in as particular variants of a more general theoretical scheme through a reconstruction of the familiar IS schedule. The argument is weaved around the theme of the relations between unemployment and real wage in the context of both a closed and an open economy to explain the common macroeconomic basis of contesting ideologies. Copyright 1990 by Oxford University Press.

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Unemployment and the real wage: the economic basis for contesting political ideologies

The deceleration in the rate of industrial growth in the Indian economy since the middlesixties, initially interpreted by some as a temporary downward deviation from trend, hasnow come to be generally accepted as reflecting long-run tendencies towards stagnation.Several explanations for these tendencies have been offered. Bhagwati and Desai (1970)and Bhagwati and Srinivasan (1975) have focused on inefficiencies and the misallocationof resources arising from industrial policies pursued by the government. Others,Chakravarty (1974), Raj (1976) and Vaidyanathan (1974) among them, have emphasisedthe sluggishness of agricultural growth which is alleged to have retarded industrial growthby limiting markets and the supply of wage goods and raw materials. A third view, reflectedin Srinivasan and Narayana (1977) for example, has put the blame on a slackening of invest-ment demand due to lower public investment, but does not explain why public investmentfell, or why its fall restrained industrial growth. Finally, there is the explanation, put forthin Bagchi (1970, 1975, 1982), in Nayyar (1978) and in parts of Mitra (1977), that inequali-ties in income distribution have resulted in a limited demand for industrial goods, reducedincentives for investment, and therefore reduced growth. This view seems to suggest apositive relation between growth and income equality which is opposed to the generallyaccepted idea, derived from Cambridge growth models, that higher growth requires greaterinequality.The purpose of this paper is to examine the last explanation by considering the inter-action between growth and income distribution in an underdeveloped economy with thehelp of a simple macroeconomic model. The model is a stylisation of the Indian economy,so that we will be able to use the model to assess the argument that a deceleration in therate of growth of the Indian industrial economy could have been caused by an unequaldistribution of income. The argument will not be made that this income distributional con-straint is the binding constraint on industrial growth: the model will merely examine theinternal consistency of the argument that a bad income distribution could explain stagnation(in the sense of reduced growth), and show that in the Indian context, as in other similarcontexts, this argument can be put forward in explaining 'stagnation'.Our argument is first presented with a highly simplified schematisation of the Indianeconomy, which we shall call the basic model. The economy modelled produces only one

/pdf/stagnation-income-distribution-and-monopoly-power-32vvgwyh78.pdf

Stagnation, income distribution and monopoly power

Alternative models of growth and distribution alternative models and alternative approaches money and inflation technical change two sector models some doctrinal issues concerning two sector models alternative models of North-south trade endogenous preferences and uneven development technical change and uneven development.

Growth, Distribution and Uneven Development

This paper extends a Steindlian model of growth and income distribution to incorporate borrowing by consumers. It shows that borrowing by consumers can improve growth prospects in the short run by increasing consumer demand. However, in the longer run the effects of increasing consumer borrowing are ambiguous because, by increasing consumer debt, it redistributes income towards the rich who have a higher propensity to save, thereby possibly depressing aggregate demand and growth despite the borrowing-induced expansion. The problem may be exacerbated by financial considerations involving the increase of the interest rate due to greater borrowing, but these considerations are not necessary for it. The problem is more likely to occur when autonomous investment demand is weak, i.e. when borrowing-induced consumption increases are most required to counter tendencies towards stagnation.

Maturity, stagnation and consumer debt: a steindlian approach

While mainstream growth theory in its neoclassical and new growth theory incarnations has no place for aggregate demand, Keynesian growth models in which aggregate demand determines growth neglect the role of aggregate supply By assuming that the rate of technological change responds to labour market conditions, this paper devel- ops a simple and conventional growth model that integrates the roles of aggregate demand and aggregate supply The model shows how the long-run equilibrium growth rate of the economy, at which the unemployment rate is constant, can be affected by aggregate demand

/pdf/aggregate-demand-aggregate-supply-and-economic-growth-1bhikxeq5g.pdf

Amitava Krishna Dutt

Papers

Stagnation, income distribution and monopoly power

Growth, Distribution and Uneven Development

Maturity, stagnation and consumer debt: a steindlian approach

Aggregate Demand, Aggregate Supply and Economic Growth

The pattern of direct foreign investment and economic growth