Transitional Growth and Income Inequality: Anything Goes
AbstractThe effect of initial income inequality on growth is the subject of a large literature. We show, both analytically and with simulation experiments, that the same level of initial income inequality can be associated with very different income developments, depending on the source of the inequality. We consider three sources: differences in asset ownership, in productivity and in shocks. For these three sources the monotonicity, the persistence and even the sign of the resulting income changes can differ. We stress the implications for empirical work.
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Bibliographic InfoPaper provided by EconWPA in its series GE, Growth, Math methods with number 0409001.
Length: 15 pages
Date of creation: 08 Sep 2004
Date of revision: 08 Sep 2004
Note: Type of Document - pdf; pages: 15
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Inequality; Growth; Ramsey models;
Find related papers by JEL classification:
- C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- D9 - Microeconomics - - Intertemporal Choice and Growth
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