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Optimal Cycles and Social Inequality: What Do We Learn from the Gini Index?

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Author Info
Stefano Bosi () (EPEE - Centre d'Etudes des Politiques Economiques - Université d'Evry-Val d'Essonne)
Thomas Seegmuller () (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
Abstract

One 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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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00194182_v1.

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Date of creation: Mar 2006
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Publication status: Published, Research in Economics, 2006, 60, 1, 35-46
Handle: RePEc:hal:cesptp:halshs-00194182_v1

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Keywords: Endogenous cycles ; two-sector models ; heterogeneous agents ; Gini index;

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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.:
  1. Bosi, Stefano & Magris, Francesco & Venditti, Alain, 2005. "Competitive equilibrium cycles with endogenous labor," Journal of Mathematical Economics, Elsevier, vol. 41(3), pages 325-349, April. [Downloadable!] (restricted)
  2. Kehoe, Timothy J. & Levine, David K. & Romer, Paul M., 1990. "Determinacy of equilibria in dynamic models with finitely many consumers," Journal of Economic Theory, Elsevier, vol. 50(1), pages 1-21, February. [Downloadable!] (restricted)
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  3. Ghiglino, Christian, 2005. "Wealth inequality and dynamic stability," Journal of Economic Theory, Elsevier, vol. 124(1), pages 106-115, September. [Downloadable!] (restricted)
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  4. Becker, Robert A. & Tsyganov, Eugene N., 2002. "Ramsey Equilibrium in a Two-Sector Model with Heterogeneous Households," Journal of Economic Theory, Elsevier, vol. 105(1), pages 188-225, July. [Downloadable!] (restricted)
  5. Nishimura, Kazuo, 1985. "Competitive equilibrium cycles," Journal of Economic Theory, Elsevier, vol. 35(2), pages 284-306, August. [Downloadable!] (restricted)
  6. Herrendorf, Berthold & Valentinyi, Akos & Waldmann, Robert, 2000. "Ruling Out Multiplicity and Indeterminacy: The Role of Heterogeneity," Review of Economic Studies, Blackwell Publishing, vol. 67(2), pages 295-307, April.
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  1. Stefano Bosi & Thomas Seegmuller, 2008. "Can Heterogeneous Preferences Stabilize Endogenous Fluctuations?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00266713_v1, HAL. [Downloadable!]
  2. Christian Ghiglino & Alain Venditti, 2008. "The role of the wealth distribution on output volatility," Economics Discussion Papers 653, University of Essex, Department of Economics. [Downloadable!]
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  3. Stefano Bosi & Thomas Seegmuller, 2006. "Can heterogeneous preferences stabilize endogenous fluctuations ?," Cahiers de la Maison des Sciences Economiques v06082, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
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