Transitional dynamics and the distribution of assets

Francesc Obiols-Homs () and Carlos Urrutia ()

Economic Theory, 2005, vol. 25, issue 2, pages 381-400

Abstract: We study the evolution of the distribution of assets in a discrete time, deterministic growth model with log-utility, a minimum consumption requirement, Cobb-Douglas technology, and agents differing in initial assets. We prove that the coefficient of variation in assets across agents decreases monotonically in a transition to the steady state from below, if (i) the consumption requirement is zero, or (ii) the consumption requirement is not too big and the initial capital stock is large enough. We also show how a positive consumption requirement or a small elasticity of substitution between capital and labor can generate non-monotonic paths for inequality. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Wealth dynamics; Heterogeneous agents; Neoclassical growth model. (search for similar items in EconPapers)
Date: 2005
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Working Paper: Transitional Dynamics and the Distribution of Assets (2004)
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