IDEAS home Printed from https://ideas.repec.org/p/sce/scecfa/318.html

The Dynamics of Wealth and Income distribution in a Neoclassical Growth Model

Author

Listed:
  • Stephen Turnovsky

    (Economics University of Washington)

  • Cecilia Garcia Penalosa

    (GREQAM and CNRS)

Abstract

We examine the evolution of the distributions of wealth and income in a Ramsey model in which agents differ in their initial capital endowment and where the labor supply is endogenous. The assumption that the utility function is homogeneous in consumption and leisure implies that the macroeconomic equilibrium is independent of the distribution of wealth and allows us to fully characterize income and wealth dynamics. We find non-degenerate long-run distributions of wealth and income. The model shows that (i) the initial level of aggregate capital is an essential determinant of whether inequality increases or decreases during the transition to the steady state; (ii) temporary shocks to the stock of capital have long-run effects on the distribution of wealth even if they do not affect the stationary aggregate variables; (iii) income inequality need not move together with wealth inequality if factor shares change during the transition.

Suggested Citation

  • Stephen Turnovsky & Cecilia Garcia Penalosa, 2006. "The Dynamics of Wealth and Income distribution in a Neoclassical Growth Model," Computing in Economics and Finance 2006 318, Society for Computational Economics.
    • Handle: RePEc:sce:scecfa:318
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Klump, Rainer & Saam, Marianne, 2008. "Calibration of normalised CES production functions in dynamic models," Economics Letters, Elsevier, vol. 99(2), pages 256-259, May.
    2. Nakamoto, Yasuhiro, 2009. "Convergence speed and preference externalities in a one-sector model with elastic labor supply," Economics Letters, Elsevier, vol. 105(1), pages 86-89, October.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sce:scecfa:318. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/sceeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.