Optimal Cycles and Social Inequality: What Do We Learn from the Gini Index?
AbstractOne of the plausible explanations for macroeconomic fluctuations relies on the occurrence of endogenous deterministic cycles. In the last three decades, most of the relevant literature has rested on the assumption of a representative agent but, recently, a few papers have investigated the role of consumers' heterogeneity on endogenous fluctuations. Our article aims at taking a step forward in order to give a more suitable interpretation. To keep things as simple as possible, we introduce heterogeneous households in a two-sector optimal growth model and we study how wealth heterogeneity affects the occurrence of endogenous cycles. In contrast to previous results, we relate the existence of such cycles to the most commonly used inequality measure, the Gini index, and analyze the impact of consumers' heterogeneity on this index.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00194182.
Date of creation: Mar 2006
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Publication status: Published, Research in Economics, 2006, 60, 1, 35-46
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Endogenous cycles ; two-sector models ; heterogeneous agents ; Gini index;
Other versions of this item:
- Bosi, Stefano & Seegmuller, Thomas, 2006. "Optimal cycles and social inequality: What do we learn from the Gini index?," Research in Economics, Elsevier, vol. 60(1), pages 35-46, March.
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