Minimum Consumption Requirements: Theoretical And Quantitative Implications For Growth And Distribution
AbstractWe study the impact of a minimum consumption requirement on the rate ofeconomic growth and the evolution of wealth distribution. The requirementintroduces a positive dependence between the intertemporal elasticity ofsubstitution and household wealth. This dependence implies a transitionphase during which the growth rate of per-capita quantities rise towardtheir steady-state values and the distributions of wealth, consumption, andpermanent income become more unequal. We calibrate the minimum consumptionrequirement to match estimates available for a sample of Indian villagersand find that these transitional effects are quantitatively significant anddepend importantly on the economy s steady-state growth rate.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Macroeconomic Dynamics.
Volume (Year): 3 (1999)
Issue (Month): 04 (December)
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Other versions of this item:
- Satyajit Chatterjee & B. Ravikumar & B. Ravikumar, 1997. "Minimum consumptions requirements: theoretical and quantitative implications for growth and distribution," Working Papers 97-15, Federal Reserve Bank of Philadelphia.
- Chatterjee, S. & Ravikumar, B., 1997. "Minimum Consumption Requirements: Theoretical and Quantitative Implications for Growth and Distribution," Working Papers 97-15, University of Iowa, Department of Economics.
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- D30 - Microeconomics - - Distribution - - - General
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