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Original scientific paper

https://doi.org/10.7906

A Study of the Role of Government in Income and Wealth Distribution by Integrating the Walrasian General Equilibrium and Neoclassical Growth Theories

Wei-Bin Zhang ; College of Asia Pacific Management, Ritsumeikan Asia Pacific University


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Abstract

This paper proposes a growth model of heterogeneous households with economic structure, wealth accumulation, endogenous labour supply, and tax rates. The paper is focused on effects of redistribution policies on income and wealth distribution, economic structure and economic growth. The paper integrates the Walrasian general equilibrium theory and neoclassical economic growth within a comprehensive framework. We overcome the controversial features in the two traditional theories by applying an alternative approach to households. We build an analytical framework for a disaggregated and microfounded general theory of economic growth with endogenous wealth accumulation. We simulate the model to identify equilibrium, stability and to plot the motion of the dynamic system with three groups. We also carry out comparative dynamic analysis with regard to the lump tax, human capital and propensity to use leisure time.

Keywords

lump tax; tax rates; Walrasian general equilibrium theory; neoclassical growth theory; income and wealth distribution

Hrčak ID:

114922

URI

https://hrcak.srce.hr/114922

Publication date:

31.1.2014.

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