Wealth inequality, preference heterogeneity and macroeconomic volatility intwo-sector economies

Alain Venditti and Christian Ghiglino

Post-Print from HAL

Abstract: Weexplore the link between wealth inequality, preference heterogeneity and macroeconomicvolatility in a two-sector neoclassical growth model. First we prove that, if agents havehomogeneous preferences, when the absolute risk tolerance is a strictly convex (concave) function, sufficiently high (low) levels of wealthinequalitymay lead to endogenous fluctuations in the neighborhood of the steady state. Second, we consider the effects of preference heterogeneity whenagents are homogeneous with respect to their wealth. We show that when the utility functionbelongs to the HARA class, sufficiently high levels of preference heterogeneitymay lead to endogenous fluctuations in the neighborhood of the steady state if theelasticity of intertemporal substitution in consumption is greater than one.

Keywords: Heterogeneity; Income Inequality; Macroeconomic Volatility; Endogenous Fluctuations.; Endogenous Fluctuations (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Published in Journal of Economic Theory, 2007, 135, pp.414-441. ⟨10.1016/j.jet.2006.05.008⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Wealth inequality, preference heterogeneity and macroeconomic volatility in two-sector economies (2007)
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:hal:journl:halshs-00279997

DOI: 10.1016/j.jet.2006.05.008

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().