The Challenges of Chinese Economic Growth: Inequality and Corruption

This thesis contains two chapters. My first chapter studies the dynamic of the distribution of wealth using a representative consumer theory with two sources of heterogeneity: taste in public goods and initial wealth. I analyse how the wealthy and the poor change their relative conditions during different economic cycles and apply the theory to a Ramsey growth model to explore distributive predictions. My second chapter studies the effect of state-owned enterprise, which is one of the most important parts of the economy, on government corruption. I also include several controls to enrich content and analysis. I hope my paper might contribute to the government's efforts to reduce poverty and fight corruption to make a better society.