Ghiglino, Christian (2005) Wealth inequality and dynamic stability. Journal of Economic Theory, 124 (1). pp. 106-115. DOI https://doi.org/10.1016/j.jet.2004.06.004
Ghiglino, Christian (2005) Wealth inequality and dynamic stability. Journal of Economic Theory, 124 (1). pp. 106-115. DOI https://doi.org/10.1016/j.jet.2004.06.004
Ghiglino, Christian (2005) Wealth inequality and dynamic stability. Journal of Economic Theory, 124 (1). pp. 106-115. DOI https://doi.org/10.1016/j.jet.2004.06.004
Abstract
We explore the link between wealth inequality and stability in a two-sector neoclassical growth model with heterogeneous agents. We show that when the inverse of absolute risk aversion (or risk tolerance) is a strictly convex function, wealth inequality is a factor that favors instability. In the opposite case, inequality favors stability. Our characterization also shows that whenever absolute risk tolerance is linear, as when preferences exhibit hyperbolic absolute risk aversion (HARA), wealth heterogeneity is neutral. © 2004 Elsevier Inc. All rights reserved.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | economic growth; heterogeneity; wealth and income inequality; instability |
| Subjects: | H Social Sciences > HB Economic Theory |
| Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
| SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
| Depositing User: | Unnamed user with email elements@essex.ac.uk |
| Date Deposited: | 16 Jul 2012 20:19 |
| Last Modified: | 18 Aug 2022 11:28 |
| URI: | http://repository.essex.ac.uk/id/eprint/3009 |