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We study the wealth distribution in Bewley economies with idiosyncratic capital income risk (entrepreneurial risk). We find, under rather general conditions, a unique ergodic distribution of wealth which displays fat tails (a Pareto distribution in the right tail).
Persistent link: https://www.econbiz.de/10011085141
We study the wealth distribution in Bewley economies with idiosyncratic capital income risk. We show analytically that under rather general conditions on the stochastic structure of the economy, a unique ergodic distribution of wealth displays a fat tail; more precisely, a Pareto distribution in...
Persistent link: https://www.econbiz.de/10010821779
We present a mechanism to analytically generate a double Pareto distribution of wealth in a continuous time OLG model with optimizing agents who have bequest motives, are subject to stochastic returns on capital and have uncertain lifespans. We disentangle, roughly, the contribution of...
Persistent link: https://www.econbiz.de/10005778528
Persistent link: https://www.econbiz.de/10009216133
We extend one of the main findings in Bossmann et al. (2007)("Bequests, taxation and the distribution of wealth in a general equilibrium model," Journal of Public Economics, 91, 1247-1271). Bequest motives per se reduce wealth inequality. We show that the result holds for a stronger criterion of...
Persistent link: https://www.econbiz.de/10011109530
In this note, I compare stationary distributions of the linear model Xn+1=anXn+bn, where an and bn are non-negative random variables. I show that an increase of the variability of an and/or bn causes a less equal stationary distribution in terms of the Lorenz dominance. The result is useful in...
Persistent link: https://www.econbiz.de/10010664113
Observation equivalence holds in the hyperbolic discounting models such as Laibson (1996), Barro (1999), and Krusell et al (2002). We study a hyperbolic discounting model where the policy function cannot be replicated by a geometric discounting model. Under the logarithmic utility and...
Persistent link: https://www.econbiz.de/10005181881
Observation equivalence holds in the hyperbolic discounting models such as Laibson (1996), Barro (1999), and Krusell et al (2002). We study a hyperbolic discounting model where the policy function cannot be replicated by a geometric discounting model. Under the logarithmic utility and...
Persistent link: https://www.econbiz.de/10010629852
Persistent link: https://www.econbiz.de/10005664027
Since the writing of David Hume, in the eighteenth century, there has been a general agreement amogst economists that an increase in the stock of money leads, initially, to an increase in economic activity. Most writer have attributed the real effects of money, in the short run, to mistaken...
Persistent link: https://www.econbiz.de/10005816399