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Inequalities and fluctuations in a dynamic general equilibrium model

Author

Listed:
  • Christian Ghiglino

    (Department of Economics, Queen Mary and Westfield College, University of London,Mile End Road, London E1 4NS UK)

  • Marielle Olszak-Duquenne

    (Departement d'Econometrie, University of Geneva, 102, Bd. Carl-Vogt,1211 Geneve-4, SWITZERLAND)

Abstract

In the present paper a tractable two-sector neo-classical growth model with heterogeneous agents is considered. The local dynamic properties of the equilibrium path are analyzed in relation with the underlying characteristics of the economy. In particular, the existence of fluctuations is related to the degree of heterogeneity in labor and in capital endowments. When applied to international trade theory, the analysis shows that free trade may distabilize a world economy that is originally stable under the regime of autarky.

Suggested Citation

  • Christian Ghiglino & Marielle Olszak-Duquenne, 2001. "Inequalities and fluctuations in a dynamic general equilibrium model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 17(1), pages 1-24.
    • Handle: RePEc:spr:joecth:v:17:y:2001:i:1:p:1-24
    Note: Received: December 28, 1998; revised version: October 29, 1999
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    Citations

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    Cited by:

    1. Bosi, Stefano & Seegmuller, Thomas, 2008. "Can heterogeneous preferences stabilize endogenous fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 32(2), pages 624-647, February.
    2. Christian Ghiglino & Marielle Olszak-Duquenne, 2005. "On The Impact Of Heterogeneity On Indeterminacy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 171-188, February.
    3. Ghiglino, Christian, 2005. "Wealth inequality and dynamic stability," Journal of Economic Theory, Elsevier, vol. 124(1), pages 106-115, September.
    4. Bosi, Stefano & Seegmuller, Thomas, 2006. "Optimal cycles and social inequality: What do we learn from the Gini index?," Research in Economics, Elsevier, vol. 60(1), pages 35-46, March.
    5. Kazuo Nishimura & Koji Shimomura, 2006. "Indeterminacy in a dynamic two-country model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 307-324, October.
    6. Ghiglino, Christian & Venditti, Alain, 2007. "Wealth inequality, preference heterogeneity and macroeconomic volatility in two-sector economies," Journal of Economic Theory, Elsevier, vol. 135(1), pages 414-441, July.
    7. Ghiglino, Christian & Sorger, Gerhard, 2002. "Poverty Traps, Indeterminacy, and the Wealth Distribution," Journal of Economic Theory, Elsevier, vol. 105(1), pages 120-139, July.
    8. Hori, Katsuhiko, 2007. "Indeterminacy in a monetary economy with heterogeneous agents," MPRA Paper 49316, University Library of Munich, Germany.
    9. Marat Ibragimov & Rustam Ibragimov, 2007. "Market Demand Elasticity and Income Inequality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(3), pages 579-587, September.

    More about this item

    Keywords

    Two-sector growth; General equilibrium; Heterogeneity; Stability of steady states; Fluctuations; Inequalities; International trade; Turnpike.;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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