Abstract
In a world in which people have different incomes owing to differences in initial factor endowments, a government may use transfer policies if it cares about equity as well as efficiency. It will be shown that, in a simple endogenous growth model in which the engine of growth is a linear capital accumulation technology, if a Ramsey policy is not available, then the government should transfer output but leave the differences in factor endowments unchanged in order to achieve economic growth and income equity at the same time. JEL Classification Number: 023
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