2006 Fiscal Year Final Research Report Summary
A study of fiscal policy for optimal growth and wealth distribution in developing countries
| Project/Area Number |
17530221
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Economic policy
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| Research Institution | Chuo Gakuin University |
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Principal Investigator |
MIYASAKA Masayuki Chuo Gakuin University, Dep of Commerce, Professor, 商学部, 教授 (50255163)
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| Project Period (FY) |
2005 – 2006
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| Keywords | inequality / economic growth / optimal tax rate / multiple equilibria / indeterminacy |
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| Research Abstract |
The purpose of this study is to examine the effect of the wealth distribution gap on long-term economic growth and to apply the theoretical growth model to the problem of distribution politics. I consider the politico-economic growth model of the distribution, discussed the optimal tax rate for the higher long-term growth and the steady state properties of the model.
The growth model has government sector whose spending affects the activity of the private production sector through the external effect and the welfare of households. On the other side, the government imposes a tax on private sector. I divide the private sector into two groups, wealthy and poor agents. The government must takes into account the economic growth, the welfare of the each group and determines the optimal tax rate.
In most existing studies of growth and distribution, the role of government spending is excessively emphasized either the external or the welfare effect. Accordingly, the determination of the optimal t
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ax rate entirely depends on the treatment about the setting of the spending effect. In addition, these models which use macroeconomic dynamical methods do not explicitly deal with the statistical distribution of income or wealth among the agents. In the past or present positive analysis of the relation between distribution and growth, many studies report that there seems to be nonlinear relation between the two variables, or dose not exist the significant causal relations.
This politico-economic growth model takes into account the distributional situation and the positive outcomes, even though very simple ways. The results are as follows. (1)The model has possibilities for multiple equilibria. Then there are multiple steady states and equilibrium tax rates which dose not necessarily coincide with the tax rate for maximizing economic growth rate. But the government policy has possibilities to coordinate with the optimal and growth maximizing one. (2)If two economies has different ratio of wealthy to poor agents, even in the same economic initial conditions, then they will reach different equilibrium points. The model suggests that when the ratio of the poor to the wealthy is high in the economy, the government tend to prefer the lower rate. (3)The model has possibilities for indeterminacy property at the neighborhood of the steady states. Less
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Research Products
(4 results)
