Economic Growth and Social Conflict

Coauthor: Dmitry Veselov

This project explains different growth trajectories among European countries in the 19th century. It investigates the long-run dynamics of political and economic institutions and capital accumulation within the overlapping generations model (OLG). For each generation, we consider a two-sector general equilibrium model with heterogeneous agents who struggle for political power. We show that, initially, the political struggle among agents is for both economic institutions and redistribution. However, after some point in time, the political struggle becomes purely for redistribution. It happens because of capital accumulation and accumulated public investments. We also consider the effects of the initial inequality on the long-run development.