Inequality and Aggregate Savings in the Neoclassical Growth Model

Foellmi, Reto (August 2010). Inequality and Aggregate Savings in the Neoclassical Growth Model (Discussion Papers 10-11). Bern: Department of Economics

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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.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Föllmi, Reto

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

15 Oct 2020 17:09

Last Modified:

15 Oct 2020 17:09

JEL Classification:

O40, D30, O10

BORIS DOI:

10.7892/boris.145733

URI:

https://boris.unibe.ch/id/eprint/145733

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