Theory and Empirical Study on Distribution and Growth Based on Borrowing Constraints
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Abstract:
This paper develops an endogenous model to study the effect of income distribution on growth based upon the Credit Market Imperfection .The model shows that initial inequality is harmful for growth when credit constraints are binding. The Fesults of testing the effect of income distribution on growth using cross-section data at the provincial level of China show that inequality is harmful for growth , human capital especially above primer and secondary male human capital improves growth.
