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...

The relationship between income distribution and economic growth has been found to depend on several factors such as capital markets imperfections, moral hazard, indivisibility in investments, and existence of dual economic characteristics. In recent literature the importance of geography has...

Extant estimates of the welfare cost of business cycles suggest that this cost is quite low and might well be minuscule. Those estimates are based on consumption data for the United States as a whole. The volatility of aggregate consumption, however, is much stronger at the state level. We argue...

This paper provides an empirical evaluation of the impact of infrastructure development on economic growth and income distribution using a large panel data set encompassing over 100 countries and spanning the years 1960-2000. The empirical strategy involves the estimation of simple equations for...

In a simultaneous equations with error components framework, we analyze the institutions-growth relationship. We address individual heterogeneity in cross-country production functions, and endogeneize factor inputs in order to disentangle the direct and indirect effects of institutions on...

This paper presents an accumulation-driven growth model where investment depends on public policy which in turn depends on economically important fundamentals. It is argued that conditioning on factor accumulation in growth regressions that also include policy variables may be problematic. When...

Most Latin American countries experienced their last peak in output per capita relative to the United States’ between 1971 and 1982. Prior to this peak per capita output was rapidly catching up to the developed world. Twenty years after the peak the average country’s relative per...

This article analyzes the effects of financial liberalization on economic growth, focusing mainly the empirical aspects of this line of research. The text aims to answer fundamental questions put forward by recent literature: What effects has capital account liberalization had on economic...

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...

This paper analyzes the development and effects of intra-provincial regional disparities in China between 1989 and 2001. A decomposition analysis shows that intraprovincial disparities contribute significantly to total regional inequality. In the second part of the paper, the impact of the...