Yang, Xiaoliang; Zhou, Peng; Dong, Xue - 2025
This paper investigates the long-run nexus between wealth inequality and aggregate output using a DSGE model in which … wealth inequality endogenously affects individual entrepreneurship incentives, thereby influencing aggregate output. Our … model passes the indirect inference test against the UK data from 1870 to 2015. We find that shocks to aggregate TFP …