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Global Business Cycles with Real Shocks in a General Equilibrium Trade Model with Endogenous Human Capital

Wei-Bin Zhang ()

Social Sciences and Education Research Review, 2017, vol. 4, issue 2, 6-41

Abstract: This paper generalizes the dynamic economic model of heterogeneous households built by Zhang (2015). The model tries to provide insights into the economic mechanisms of how the richest one per cent of the global population own 50% of the global wealth. It explains inequality in a purely competitive economic environment with endogenous wealth and human capital accumulation. The study simulated a case with three countries and each country with three groups of the population. It demonstrated the existence of an equilibrium point at which the rich 1% own more than half of the global wealth. This study generalizes Zhang’s model by making all the time-independent parameters as time-dependent parameters. We demonstrate how the system reacts to exogenous periodic perturbations.

Keywords: Business cycles; exogenous shocks; inequality and global growth; trade; endogenous wealth; endogenous human capital (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2017
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