Income distribution, political instability, and investment

Income inequality and economic growth

“…We examine the relationship theoretically using a stochastic optimal growth model composed by heterogeneous agents. 4 We also introduce a progressive tax system into our model and get a numerical solution. We can conclude, in advance, (i) that depending on the state of development, both are possible, that is, higher inequality can retard growth in the early stage of economic development and can encourage growth in a near steady state.…”

Cambio climático y agricultura: una revisión de la literatura con énfasis en América Latina

“…Ésta es necesaria para el crecimiento puesto que el acceso inadecuado e irregular a alimentos limita la productividad y reduce la inversión en capital humano (Bliss y Stern, 1978;Strauss, 1986). A nivel macroeconómico, las crisis alimentarias recurrentes afectan la estabilidad política y económi-ca, lo que a su vez reduce la eficiencia de la inversión (Alesina y Perotti, 1996).…”

Why are Rich Countries More Politically Cohesive?

“…However, their ultimate dependent variables are economic and government performance, while they model political include religious and linguistic fractionalization. In addition, we include variables suggested by the literature on political instability in the control set (e.g., Alesina and Perotti, 1996;Annett, 2001): the urbanization rate, primary schooling, and measures of income inequality or skewness. We also check robustness against the inclusion of population size and age composition of the population, plus a full set of continent fixed effects.…”

“…Hence, in so far as political instability is a symptom of a lack of political cohesion, our theory contributes to a further understanding of why poorer economies tend to be more politically unstable, and why this state of affairs could come at the cost of lower living standards. From this perspective, this paper is related to the body of literature that directly examines the sources of political instability (e.g., Olson, 1963, Alesina andPerotti, 1996;Easterly and Levine, 1997) or civil conflict (Collier and Hoeffler, 2004;Miguel et al, 2004;Olsson, 2007). There are a number of other contributions that are similarly related, and that provide theory and evidence on the consequences of political instability for prosperity or institutional change (e.g., Barro, 1991;Acemoglu and Robinson, 2000;Friedman, 2005).…”