Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76751
Authors: 
Foellmi, Reto
Year of Publication: 
2010
Series/Report no.: 
Discussion Papers, Department of Economics, Universität Bern 10-11
Abstract: 
Within the context of the neoclassical growth model I investigate the implications of (initial) endowment inequality when the rich have a higher marginal savings rate than the poor. More unequal societies grow faster in the transition process, and therefore exhibit a higher speed of convergence. Furthermore, there is divergence in consumption and lifetime wealth if the rich exhibit a higher intertemporal elasticity of substitution. Unlike the Solow-Stiglitz model, the steady state is always unique although the consumption function is concave.
Subjects: 
marginal propensity to consume
income distribution
growth
concave consumption function
JEL: 
O40
D30
O10
Document Type: 
Working Paper

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