Government debt, income distribution and growth
Article Abstract:
A post-Keynesian model reveals that an increasing debt-capital ratio causes a rise in income inequality because interest payments on debt increase faster than after-tax income of workers. Income distribution may improve in the long run if increasing debt-capital ratio results due to the expansionary fiscal policies of the government. However, attempts to restore debt-capital ratio to its initial value may increase income inequality. The model assumes growth in terms of aggregate demand, and income distribution in terms of wages to the workers, and profit and interest income to the capitalists.
Publication Name: Cambridge Journal of Economics
Subject: Economics
ISSN: 0309-166X
Year: 1996
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Uneven development and the liberalisation of trade and capital flows: the case of Mexico
Article Abstract:
The effect of protectionism on a country's economy depends on its stage of development in relation to world development. Protectionism can be positive at some stages, but hamper growth at other stages. Trade liberalization in Mexico has occurred at a time when real wages have dropped and agricultural workers have received less support. There is no guarantee that real incomes will rise in the future, especially since Mexico has to compete with countries with lower wages in order to attract foreign investment. Liberalization also has distributional implications.
Publication Name: Cambridge Journal of Economics
Subject: Economics
ISSN: 0309-166X
Year: 1998
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