A calibrated model of saving and income distribution for the UK

Dr Martin Weale ()
Authors registered in the RePEc Author Service: Michela Vecchi and Mary O'MAHONY ()

No 123, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: We construct a general equilibrium model of a panel of 5000 agents in overlapping population cohorts, with a view to assessing its ability to represent both the macroeconomic and distributional characteristics of the economy; we take account of the income uncertainty which people face and calibrate it to represent the key characteristics of the economy. We find that, in a situation in which saving is motivated by life-cycle, precautionary and bequest motives a reasonably good representation can be obtained of both the distribution of wealth and the intergenerational transmission of wealth in the United Kingdom, The model offers a means of studying the distributional impact of policy changes. It suggests that inclusion of the bequest motive is important if the distribution of wealth is to be modelled well.

Date: 1997-11
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:123

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