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The wealth distribution in Bewley economies with capital income risk

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  • Benhabib, Jess
  • Bisin, Alberto
  • Zhu, Shenghao

Abstract

We study the wealth distribution in Bewley economies with idiosyncratic capital income risk. We show analytically that under rather general conditions on the stochastic structure of the economy, a unique ergodic distribution of wealth displays a fat tail.

Suggested Citation

  • Benhabib, Jess & Bisin, Alberto & Zhu, Shenghao, 2015. "The wealth distribution in Bewley economies with capital income risk," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 489-515.
  • Handle: RePEc:eee:jetheo:v:159:y:2015:i:pa:p:489-515
    DOI: 10.1016/j.jet.2015.07.013
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    More about this item

    Keywords

    Wealth distribution; Bewley economies; Pareto distribution; Fat tails; Capital income risk;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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