EconPapers    
Economics at your fingertips  
 

Luxury consumption, precautionary savings and wealth inequality

Campanale Claudio ()
Additional contact information
Campanale Claudio: Universidad de Alicante, Departamento de Fundamentos del Análisis Económico, Universidad de Alicante, Campus San Vicente del Raspeig, 03690, Alicante, Spain, Phone: +34 965903614, Fax: +34 965903898; and CeRP (Collegio Carlo Alberto), Via Real Collegio 30, 10024 Moncalieri (TO), Italy

The B.E. Journal of Macroeconomics, 2018, vol. 18, issue 1, 15

Abstract: Most macroeconomic models are based on the assumption of a single homogeneous consumption good. In the present paper we consider a model with two goods: a basic good and a luxury good. We then apply this assumption to a standard general equilibrium heterogeneous agent model. We find a substantial reduction in precautionary savings compared to a standard model. The effect on wealth inequality turns out to be ambiguous and to depend on the size of the assumed earnings risk.

Keywords: luxury consumption; non-homothetic utility; precautionary savings; wealth inequality (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
https://www.degruyter.com/view/j/bejm.2018.18.issu ... -0196.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejmac:v:18:y:2018:i:1:p:15:n:3

Ordering information: This journal article can be ordered from
https://www.degruyter.com/view/j/bejm

Access Statistics for this article

The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti

More articles in The B.E. Journal of Macroeconomics from De Gruyter
Series data maintained by Peter Golla ().

 
Page updated 2018-02-24
Handle: RePEc:bpj:bejmac:v:18:y:2018:i:1:p:15:n:3