An agent-based model of trickle-up growth and income inequality

Elisa Palagi, Mauro Napoletano, Andrea Roventini and Jean-Luc Gaffard

Economic Modelling, 2023, vol. 129, issue C

Abstract: We build an agent-based model to study how coordination failures, credit constraints, and unequal access to investment opportunities affect inequality and aggregate income dynamics. We show that macroeconomic conditions are affected by income distribution and that the model features trickle-up growth dynamics. Redistribution toward poorer households raises demand and benefits all agents’ income growth. Simulations show that our model reproduces several stylized facts concerning income inequality and social mobility. Finally, fiscal policies facilitating access to investment opportunities by poor households have the largest impact, raising income and decreasing inequality, with policy timing being crucial.

Keywords: Income inequality; Social mobility; Credit constraints; Coordination failures; Effective demand; Trickle-up growth; Fiscal policy (search for similar items in EconPapers)
JEL-codes: C63 D31 E21 E63 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: An agent-based model of trickle-up growth and income inequality (2023)
Working Paper: An agent-based model of trickle-up growth and income inequality (2023)
Working Paper: An agent-based model of trickle-up growth and income inequality (2022)
Working Paper: An agent-based model of trickle-up growth and income inequality (2022)
Working Paper: An Agent-based Model of Trickle-up Growth and Income Inequality (2021)
Working Paper: An agent-based model of trickle-up growth and income inequality (2021)
Working Paper: An agent-based model of trickle-up growth and income inequality (2021)
Working Paper: An agent-based model of trickle-up growth and income inequality (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:129:y:2023:i:c:s0264999323003474

DOI: 10.1016/j.econmod.2023.106535

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