Inequality and Aggregate Savings in the Neoclassical Growth Model
AbstractWithin the context of the neoclassical growth model I investigate the implications of (initial) endowment inequality when the rich have a higher marginal savings rate than the poor. More unequal societies grow faster in the transition process, and therefore exhibit a higher speed of convergence. Furthermore, there is divergence in consumption and lifetime wealth if the rich exhibit a higher intertemporal elasticity of substitution. Unlike the Solow-Stiglitz model, the steady state is always unique although the consumption function is concave.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7569.
Date of creation: Nov 2009
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- Reto Foellmi, 2010. "Inequality and Aggregate Savings in the Neoclassical Growth Model," Diskussionsschriften dp1011, Universitaet Bern, Departement Volkswirtschaft.
- Reto Foellmi, 2008. "Inequality and aggregate savings in the neoclassical growth model," IEW - Working Papers 395, Institute for Empirical Research in Economics - University of Zurich.
- D30 - Microeconomics - - Distribution - - - General
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stiglitz, Joseph E, 1969.
"Distribution of Income and Wealth among Individuals,"
Econometric Society, vol. 37(3), pages 382-97, July.
- Joseph E. Stiglitz, 1967. "Distribution of Income and Wealth Among Individuals," Cowles Foundation Discussion Papers 238, Cowles Foundation for Research in Economics, Yale University.
- Schlicht, Ekkehart, 1975. "A Neoclassical Theory of Wealth Distribution," Munich Reprints in Economics 3386, University of Munich, Department of Economics.
- Chatterjee, Satyajit, 1994. "Transitional dynamics and the distribution of wealth in a neoclassical growth model," Journal of Public Economics, Elsevier, vol. 54(1), pages 97-119, May.
- Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2000.
"Do the rich save more?,"
Finance and Economics Discussion Series
2000-52, Board of Governors of the Federal Reserve System (U.S.).
- Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
- Lucas, Robert Jr. & Stokey, Nancy L., 1984.
"Optimal growth with many consumers,"
Journal of Economic Theory,
Elsevier, vol. 32(1), pages 139-171, February.
- Bourguignon, Francois, 1981. "Pareto Superiority of Unegalitarian Equilibria in Stiglitz' Model of Wealth Distribution with Convex Saving Function," Econometrica, Econometric Society, vol. 49(6), pages 1469-75, November.
- Edward N. Wolff, 1998. "Recent Trends in the Size Distribution of Household Wealth," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 131-150, Summer.
- Jaume Ventura & Francesco Caselli, 2000.
"A Representative Consumer Theory of Distribution,"
American Economic Review,
American Economic Association, vol. 90(4), pages 909-926, September.
- Caselli, F. & Ventura, J., 1996. "A Representative Consumer Theory of Distribution," Working papers 96-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Caselli, G & Ventura, J, 1996. "A Representative Consumer Theory of Distribution," Papers 534, Harvard - Institute for International Development.
- Becker, Robert A, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, MIT Press, vol. 95(2), pages 375-82, September.
- Bliss, Christopher, 2004. "Koopmans recursive preferences and income convergence," Journal of Economic Theory, Elsevier, vol. 117(1), pages 124-139, July.
- Schmidt-Hebbel, Klaus & Serven, Luis, 2000.
"Does income inequality raise aggregate saving?,"
Journal of Development Economics,
Elsevier, vol. 61(2), pages 417-446, April.
- Hongyi Li & Heng-fu Zou, 2004.
"Savings and Income Distribution,"
Annals of Economics and Finance,
Society for AEF, vol. 5(2), pages 245-270, November.
- Smith, Douglas, 2001. "International evidence on how income inequality and credit market imperfections affect private saving rates," Journal of Development Economics, Elsevier, vol. 64(1), pages 103-127, February.
- 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.
- Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.