Consequence of Heterogeneous Economic Rents under the MDC-based Procedure

Taiji Harashima

MPRA Paper from University Library of Munich, Germany

Abstract: If preferences of households are heterogeneous, there is no guarantee that a steady state exists other than corner solutions, and only the most advantaged household will eventually possess all the capital in the economy. This is also true if economic rents are obtained persistently and unevenly among households. I examine whether this is true even if households behave not on the basis of rational expectations but on the basis of keeping the most comfortable capital-wage ratio and show that there is no guarantee in this case as well.

Keywords: Capital accumulation; Economic rents; Heterogeneity; Inequality; Steady state (search for similar items in EconPapers)
JEL-codes: D63 E21 (search for similar items in EconPapers)
Date: 2021-02-05
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (6)

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