Growth and distribution endogenously determined: a theoretical model and empirical evidence

Vol. 39 No. 2 (2019)

Apr-Jun / 2019
Published April 1, 2019
PDF-English
PDF-English

How to Cite

Borrero, Hernán, and Nestor Garza. 2019. “Growth and Distribution Endogenously Determined: A Theoretical Model and Empirical Evidence”. Brazilian Journal of Political Economy 39 (2), 344-61. https://doi.org/10.1590/0101-31572019-2880.

Growth and distribution endogenously determined: a theoretical model and empirical evidence

Hernán Borrero
Universidad del Norte, Barranquilla, Colombia.
Nestor Garza
California State University at Dominguez Hills, Carson – CA, United States. Nestor Garza is also associated of Universidad del Norte, Barranquilla, Colombia.
Brazilian Journal of Political Economy, Vol. 39 No. 2 (2019), Apr-Jun / 2019, Pages 344-361

Abstract

We build upon an already known but scarcely developed feature of growth theory: the importance of asset distribution in an aggregate production function. We elaborate on a simple model of two individuals, and then generalize its deductions to an extended model of n agents, concluding that perfectly distributed productive capital leads to positive and optimum long-run “endogenous” growth. Recent and classical empirical literature on the topic suggests this interpretation. In addition, we find exploratory panel data evidence that supports our theory of growth and distribution in a set of Latin-American countries.

JEL Classification: O10; O41; O54.


Keywords: Growth, asset distribution, inequality, Latin America, production function