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Optimal cycles and social inequality: What do we learn from the Gini index?

Stefano Bosi () and Thomas Seegmuller ()
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Stefano Bosi: EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: One of the plausible explanations for macroeconomic fluctuations relies on the occurrence of endogenous deterministic cycles. In the last three decades, most of the relevant literature has rested on the assumption of a representative agent but, recently, a few papers have investigated the role of consumers' heterogeneity on endogenous fluctuations. Our article aims at taking a step forward in order to give a more suitable interpretation. To keep things as simple as possible, we introduce heterogeneous households in a two-sector optimal growth model and we study how wealth heterogeneity affects the occurrence of endogenous cycles. In contrast to previous results, we relate the existence of such cycles to the most commonly used inequality measure, the Gini index, and analyze the impact of consumers' heterogeneity on this index.

Keywords: Endogenous cycles; two-sector models; heterogeneous agents; Gini index (search for similar items in EconPapers)
Date: 2006-03
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00194182
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Published in Research in Economics, Elsevier, 2006, 60 (1), pp.35-46. ⟨10.1016/j.rie.2005.12.003⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00194182

DOI: 10.1016/j.rie.2005.12.003

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