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On the long-run wealth distribution in a simple Ramsey model with heterogeneous households

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  • Nakamura, Tamotsu

Abstract

This paper analyzes the long-run wealth distribution in a Ramsey model where individuals have a common rate of time preference but different intertemporal elasticities of substitution. As a result, it is shown that heterogeneity among households in intertemporal substitution is sufficient for the existence of a non-degenerate long-run wealth distribution. We also investigate the properties of the long-run wealth distribution and the transition of capital and consumption using the phase diagram.

Suggested Citation

  • Nakamura, Tamotsu, 2020. "On the long-run wealth distribution in a simple Ramsey model with heterogeneous households," Economic Modelling, Elsevier, vol. 84(C), pages 177-180.
    • Handle: RePEc:eee:ecmode:v:84:y:2020:i:c:p:177-180
    DOI: 10.1016/j.econmod.2019.04.004
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    References listed on IDEAS

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    1. Sorger, Gerhard, 2002. "On the Long-Run Distribution of Capital in the Ramsey Model," Journal of Economic Theory, Elsevier, vol. 105(1), pages 226-243, July.
    2. Becker, Robert A. & Borissov, Kirill & Dubey, Ram Sewak, 2015. "Ramsey equilibrium with liberal borrowing," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 296-304.
    3. Lucas, Robert Jr. & Stokey, Nancy L., 1984. "Optimal growth with many consumers," Journal of Economic Theory, Elsevier, vol. 32(1), pages 139-171, February.
    4. Sarte, Pierre-Daniel G., 1997. "Progressive taxation and income inequality in dynamic competitive equilibrium," Journal of Public Economics, Elsevier, vol. 66(1), pages 145-171, October.
    5. Tamotsu Nakamura, 2014. "On Ramsey's conjecture with AK technology," Economics Bulletin, AccessEcon, vol. 34(2), pages 875-884.
    6. Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(2), pages 375-382.
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    Cited by:

    1. Masakazu Emoto & Tamotsu Nakamura, 2021. "Intertemporal elasticity of substitution and the transitional dynamics and steady state of wealth distribution," Discussion Papers 2101, Graduate School of Economics, Kobe University.

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    More about this item

    Keywords

    Ramsey model; Intertemporal elasticity of substitution; Wealth distribution; Transitional dynamics;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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