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Transitional Dynamics and the Distribution of Assets

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Author Info
Francesc Obiols-Homs (Centro de Investigacion Economica, ITAM)
Carlos Urrutia (Centro de Investigacion Economica, ITAM)

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Abstract

We study the evolution of the distribution of assets in a discrete time, de-terministic growth model with log-utility, a minimum consumption require-ment, Cobb-Douglas technology, and agents differing in initial assets. We prove that the coefficient of variation in assets across agents decreases mono-tonically in a transition to the steady state from below, if (i) the consumption requirement is zero, or (ii) the consumption requirement is not too big and the initial capital stock is large enough. We also show how a positive consumption requirement or a small elasticity of substitution between capital and labor can generate non-monotonic paths for inequality.

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File URL: http://129.3.20.41/eps/mac/papers/0407/0407020.pdf
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Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number 0407020.

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Length: 25 pages
Date of creation: 17 Jul 2004
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Handle: RePEc:wpa:wuwpma:0407020

Note: Type of Document - pdf; pages: 25
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Web page: http://129.3.20.41

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Related research
Keywords: Income distribution Transitional Dynamics Neoclassical Growth Model

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

References listed on IDEAS
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  1. repec:cup:macdyn:v:3:y:1999:i:4:p:482-505 is not listed on IDEAS
  2. Atkeson, Andrew & Ogaki, Masao, 1996. "Wealth-varying intertemporal elasticities of substitution: Evidence from panel and aggregate data," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 507-534, December. [Downloadable!] (restricted)
    Other versions:
  3. Stiglitz, Joseph E, 1969. "Distribution of Income and Wealth among Individuals," Econometrica, Econometric Society, vol. 37(3), pages 382-97, July. [Downloadable!] (restricted)
    Other versions:
  4. Hernandez D, Alejandro, 1991. "The dynamics of competitive equilibrium allocations with borrowing constraints," Journal of Economic Theory, Elsevier, vol. 55(1), pages 180-191, October. [Downloadable!] (restricted)
  5. Francesco Caselli & Jaume Ventura, 2000. "A Representative Consumer Theory of Distribution," American Economic Review, American Economic Association, vol. 90(4), pages 909-926, September. [Downloadable!] (restricted)
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  6. Huggett, Mark & Ventura, Gustavo, 2000. "Understanding why high income households save more than low income households," Journal of Monetary Economics, Elsevier, vol. 45(2), pages 361-397, April. [Downloadable!] (restricted)
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  7. Huggett, Mark, 1993. "The risk-free rate in heterogeneous-agent incomplete-insurance economies," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 953-969. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
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Cited by:
(explanations, 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. Yoshiyasu Ono & Akihisa Shibata, 2006. "Capital Income Taxation and Specialization Patterns: Investment Tax vs. Saving Tax," Working Papers 613, Kyoto University, Institute of Economic Research. [Downloadable!]
  2. Luis San Vicente Portes, 2005. "On the Distributional Effects of Trade Policy: A Macroeconomic Perspective," Computing in Economics and Finance 2005 358, Society for Computational Economics. [Downloadable!]
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