Inequality and Aggregate Savings in the Neoclassical Growth Model

Reto Foellmi

No 7569, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Within the context of the neoclassical growth model I investigate the implications of (initial) endowment inequality when the rich have a higher marginal savings rate than the poor. More unequal societies grow faster in the transition process, and therefore exhibit a higher speed of convergence. Furthermore, there is divergence in consumption and lifetime wealth if the rich exhibit a higher intertemporal elasticity of substitution. Unlike the Solow-Stiglitz model, the steady state is always unique although the consumption function is concave.

Keywords: Concave consumption function; Growth; Income distribution; Marginal propensity to consume (search for similar items in EconPapers)
JEL-codes: D30 O10 O40 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP7569 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Inequality and Aggregate Savings in the Neoclassical Growth Model (2010)
Working Paper: Inequality and aggregate savings in the neoclassical growth model (2008)
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:cpr:ceprdp:7569

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP7569

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().