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Consequence of Heterogeneous Economic Rents under the MDC-based Procedure

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  • Harashima, Taiji

Abstract

If preferences of households are heterogeneous, there is no guarantee that a steady state exists other than corner solutions, and only the most advantaged household will eventually possess all the capital in the economy. This is also true if economic rents are obtained persistently and unevenly among households. I examine whether this is true even if households behave not on the basis of rational expectations but on the basis of keeping the most comfortable capital-wage ratio and show that there is no guarantee in this case as well.

Suggested Citation

  • Harashima, Taiji, 2021. "Consequence of Heterogeneous Economic Rents under the MDC-based Procedure," MPRA Paper 105765, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:105765
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    File URL: https://mpra.ub.uni-muenchen.de/105765/1/MPRA_paper_105765.pdf
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    References listed on IDEAS

    as
    1. Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(2), pages 375-382.
    2. Harashima, Taiji, 2016. "Ranking Value and Preference: A Model of Superstardom," MPRA Paper 74626, University Library of Munich, Germany.
    3. Harashima, Taiji, 2010. "Sustainable Heterogeneity: Inequality, Growth, and Social Welfare in a Heterogeneous Population," MPRA Paper 22521, University Library of Munich, Germany.
    4. Harashima, Taiji, 2012. "Sustainable Heterogeneity as the Unique Socially Optimal Allocation for Almost All Social Welfare Functions," MPRA Paper 40938, University Library of Munich, Germany.
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    Cited by:

    1. Harashima, Taiji, 2022. "Numerical Simulations of Reaching a Steady State: No Need to Generate Any Rational Expectations," MPRA Paper 115335, University Library of Munich, Germany.
    2. Harashima, Taiji, 2021. "The Root Cause of Sovereign Default," MPRA Paper 110010, University Library of Munich, Germany.
    3. Harashima, Taiji, 2020. "A Theory of the Credit-to-GDP Gap: Using Credit Gaps to Predict Financial Crises," MPRA Paper 111732, University Library of Munich, Germany.
    4. Harashima, Taiji, 2021. "Economic Inequality and Heterogeneous Success Rates of Investment," MPRA Paper 110688, University Library of Munich, Germany.
    5. Harashima, Taiji, 2023. "Numerical Simulation of an Endogenously Growing Economy and Its Balanced Growth Path," MPRA Paper 119391, University Library of Munich, Germany.

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    More about this item

    Keywords

    Capital accumulation; Economic rents; Heterogeneity; Inequality; Steady state;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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