Cumulative Effect of Inequality : A Computational Study of Conflict Models
This paper examines the relationship between inequality and economic growth using conflict models and computational simulations. I construct a dynamic sequential conflict model that allows us to observe the cumulative effect of inequalities in wealth and ability in a single framework. The computational simulation illustrates the dynamics of the wealth level of players. The main findings are as follows: (1) if the conflict is not intensive, then the equilibrium that achieves equal distribution of wealth is unique and stable; (2) if the conflict is intensive, the equal distribution equilibrium becomes an unstable saddle point; and furthermore (3) when the productivity of one player is lower than the other, the less productive player exploits the other through the conflict process.
|Date of creation:||Oct 2010|
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