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Will wealth become more concentrated in Europe? Evidence from a calibrated Post-Keynesian model

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  • Stefan Ederer
  • Miriam Rehm

Abstract

We develop and calibrate an analytical growth model in the Post-Keynesian tradition with an endogenous wealth distribution and differential returns to wealth between workers and capitalists. We show that a long-run equilibrium allows for non-zero wealth owned by workers, even as the model contains the ‘triumph of the rentier’ predicted by Piketty as a special case. The model’s calibration to ten European countries shows that the distribution of wealth is likely to become more unequal in all cases, barring political countermeasures.

Suggested Citation

  • Stefan Ederer & Miriam Rehm, 2020. "Will wealth become more concentrated in Europe? Evidence from a calibrated Post-Keynesian model," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 44(1), pages 55-72.
    • Handle: RePEc:oup:cambje:v:44:y:2020:i:1:p:55-72.
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    File URL: http://hdl.handle.net/10.1093/cje/bez014
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    Cited by:

    1. Petach, Luke & Tavani, Daniele, 2022. "Aggregate demand externalities, income distribution, and wealth inequality," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 433-446.
    2. Roth, Steve, 2021. "Why the Flow of Funds Don’t Explain the Flow of Funds: Sectoral Balances, Balance Sheets, and the Accumulation Fallacy," MPRA Paper 105281, University Library of Munich, Germany.
    3. Manuel David Cruz & Daniele Tavani, 2022. "Secular Stagnation: A Classical-Marxian View," Working Papers PKWP2229, Post Keynesian Economics Society (PKES).

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