Transitional Dynamics and the Distribution of Assets
AbstractWe 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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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0407020.
Length: 25 pages
Date of creation: 17 Jul 2004
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Income distribution; Transitional Dynamics; Neoclassical Growth Model;
Other versions of this item:
- Francesc Obiols-Homs & Carlos Urrutia, 2005. "Transitional dynamics and the distribution of assets," Economic Theory, Springer, vol. 25(2), pages 381-400, 02.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- E21 - Macroeconomics and Monetary Economics - - 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
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