Habit formation, growth, and Ramsey's conjecture
Shinya Tsukahara ()
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Shinya Tsukahara: Kyoto University of Foreign Studies
Economics Bulletin, 2017, vol. 37, issue 4, 2871-2880
This note deals with long-run distribution of wealth (i.e., ownership pattern of physical capital) in an endogenously growing economy populated by different types of households with habit-forming consumption. We show a counter-intuitive result where the most impatient household (with the highest subjective discount rate) could eventually own â€œalmost allâ€ of the economy's capital, as long as it has the strongest consumption habit. Furthermore, we consider whether patience becomes the sole determinant of eventual wealth distribution in a perpetually growing economy with habit formation, proposing a slight modification to Ramsey's conjecture.
Keywords: Habit formation; Endogenous growth; Wealth distribution; Ramsey's conjecture (search for similar items in EconPapers)
JEL-codes: D9 E2 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-17-00806
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