Optimal Cycles and Social Inequality: What Do We Learn from the Gini Index?
One of the plausible explanations for macroeconomic fluctuations relies on the occurrence of endogenous deterministic cycles. In the last three decades, most of the relevant literature has rested on the assumption of a representative agent but, recently, a few papers have investigated the role of consumers' heterogeneity on endogenous fluctuations. Our article aims at taking a step forward in order to give a more suitable interpretation. To keep things as simple as possible, we introduce heterogeneous households in a two-sector optimal growth model and we study how wealth heterogeneity affects the occurrence of endogenous cycles. In contrast to previous results, we relate the existence of such cycles to the most commonly used inequality measure, the Gini index, and analyze the impact of consumers' heterogeneity on this index.
|Date of creation:||Mar 2006|
|Publication status:||Published in Research in Economics, Elsevier, 2006, 60 (1), pp.35-46. <10.1016/j.rie.2005.12.003>|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00194182|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
References listed on IDEAS
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.:
- Santos, Manuel S., 1992. "Differentiability and comparative analysis in discrete-time infinite-horizon optimization," Journal of Economic Theory, Elsevier, vol. 57(1), pages 222-229.
- Kehoe, Timothy J. & Levine, David K. & Romer, Paul M., 1990.
"Determinacy of equilibria in dynamic models with finitely many consumers,"
Journal of Economic Theory,
Elsevier, vol. 50(1), pages 1-21, February.
- Timothy J. Kehoe & David K. Levine & Paul M. Romer, 1989. "Determinacy of equilibria in dynamic models with finitely many consumers," Staff Report 118, Federal Reserve Bank of Minneapolis.
- Timothy J. Kehoe & David K. Levine & Paul Romer, 1990. "Determinacy of Equilibrium in Dynamic Models with Finitely Many Consumers," Levine's Working Paper Archive 165, David K. Levine.
- Berthold Herrendorf & Akos Valentinyi & Robert Waldmann, 2000. "Ruling Out Multiplicity and Indeterminacy: The Role of Heterogeneity," Review of Economic Studies, Oxford University Press, vol. 67(2), pages 295-307.
- Bosi, Stefano & Magris, Francesco & Venditti, Alain, 2005. "Competitive equilibrium cycles with endogenous labor," Journal of Mathematical Economics, Elsevier, vol. 41(3), pages 325-349, April.
- Ghiglino, Christian, 2005. "Wealth inequality and dynamic stability," Journal of Economic Theory, Elsevier, vol. 124(1), pages 106-115, September.
- Christian Ghiglino, 2003. "Wealth inequality and dynamic stability," Diskussionsschriften dp0310, Universitaet Bern, Departement Volkswirtschaft.
- 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.
- Becker, Robert A. & Tsyganov, Eugene N., 2002. "Ramsey Equilibrium in a Two-Sector Model with Heterogeneous Households," Journal of Economic Theory, Elsevier, vol. 105(1), pages 188-225, July.
- Nishimura, Kazuo, 1985. "Competitive equilibrium cycles," Journal of Economic Theory, Elsevier, vol. 35(2), pages 284-306, August.