Inequality and aggregate savings in the neoclassical growth model

Arbeitspapier

Within the context of the neoclassical growth model I investigate the implications of (initial) endowment inequality when the rich have a higher marginal savings rate than the poor. More unequal societies grow faster in the transition process, and therefore exhibit a higher speed of convergence. Furthermore, there is divergence in consumption and lifetime wealth if the rich exhibit a higher intertemporal elasticity of substitution. Unlike the Solow-Stiglitz model, the steady state is always unique although the consumption function is concave.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 10-11

Classification and Topics

• Classification: Wirtschaft ; Economic Growth and Aggregate Productivity: General ; Distribution: General ; Economic Development: General
• Subject: marginal propensity to consume ; income distribution ; growth ; concave consumption function ; Gesamtwirtschaftliche Konsumfunktion ; Soziale Ungleichheit ; Einkommensverteilung ; Solow-Modell ; Wachstumstheorie ; Neoklassik ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Foellmi, Reto
• Event: Veröffentlichung
• (who): University of Bern, Department of Economics
• (where): Bern
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/76751
• Last update: 10.03.2025, 11:41 AM CET