A Statistical Equilibrium Model of Wealth Distribution
The paper develops a theoretical model of endogenous wealth distribution, showing that a logarithmic mean constraint in the maximum entropy formalism leads to a power law distribution. On the level of economic theory, the model implies two trade-offs: first, the higher the aggregate growth of wealth portfolios and, second, the higher the average turnover activity in individual portfolios, the less equal the distribution of wealth. Empirical estimates of the power law exponent are extracted from Lorenz type data for different countries in different time periods and a numerical example illustrates the model.
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|Date of creation:||01 Apr 2001|
|Contact details of provider:|| Web page: http://www.econometricsociety.org/conference/SCE2001/SCE2001.html|
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