This paper presents a simple Cass-Koopmans-Ramsey AK growth model with heterogeneity that explains how policies that increase income inequality may temporarily boost a country’s income growth rate. Briefly put, a change in policy that reduces redistributive transfers will free up...

This paper presents a simple Cass-Koopmans-Ramsey AK growth model with heterogeneity that explains how policies that increase income inequality may temporarily boost a country's income growth rate. Briefly put, a change in policy that reduces redistributive transfers will free up resources to...