Politico-economic equilibrium and economic growth

Per Krusell, Vincenzo Quadrini, José Víctor Ríos-Rull

Research output: Contribution to journalArticlepeer-review

98 Scopus citations

Abstract

We propose a notion of dynamic politico-economic equilibrium which builds on two key assumptions: policies are determined sequentially, and agents are fully rational in their roles as both consumers and voters. We examine a simple model of endogenous growth and infinitely-lived agents, where taxes on income are endogenous and where growth critically depends on the initial distribution of asset holdings. We relate our equilibrium definition and results to existing literature on time consistency and on political economy and growth. We show that our equilibria are time-consistent and we argue that the choice of equilibrium concept might have important quantitative implications.

Original languageEnglish (US)
Pages (from-to)243-272
Number of pages30
JournalJournal of Economic Dynamics and Control
Volume21
Issue number1
StatePublished - Jan 1997

Keywords

  • Economic growth
  • Political economy
  • Wealth distribution

Fingerprint Dive into the research topics of 'Politico-economic equilibrium and economic growth'. Together they form a unique fingerprint.

Cite this