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Asset prices and wealth inequality in a simple model with idiosyncratic shocks

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  • Sergio Salas

Abstract

This paper analytically solves a heterogeneous agent model with idiosyncratic shocks to marginal utility of consumption and explores the effects of the borrowing constraint on the price of the asset, the composition of borrowers and lenders in the credit market, and wealth inequality. Results are derived in a stylized model and in a pedagogical fashion.

Suggested Citation

  • Sergio Salas, 2017. "Asset prices and wealth inequality in a simple model with idiosyncratic shocks," Estudios de Economia, University of Chile, Department of Economics, vol. 44(1 Year 20), pages 105-119, June.
    • Handle: RePEc:udc:esteco:v:44:y:2017:i:1:p:105-119
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    File URL: http://estudiosdeeconomia.uchile.cl/index.php/EDE/article/viewFile/45216/47278
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    References listed on IDEAS

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    More about this item

    Keywords

    Asset prices; borrowing constraints; wealth inequality; heterogeneous agents;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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