Title: Wealth Inequality, or r-g, in the Economic Growth Model
Abstract:We investigate a simple continuous-time overlapping generations model with a neoclassical production function and technological progress. We demonstrate that the degree of wealth inequality is positiv...We investigate a simple continuous-time overlapping generations model with a neoclassical production function and technological progress. We demonstrate that the degree of wealth inequality is positively related to the difference between the real interest rate r and the growth rate of income per capita g , and if g falls, the r-g gap widens and inequality worsens. We also argue that a wealth tax reduces the wealth inequality. All of these results are consistent with the famous predictions advanced by Thomas Piketty in Capital in the Twenty-First Century (2014). We next investigate consumption tax and find that it enhances capital accumulation and reduces r-g , and thus wealth inequality.Read More
Publication Year: 2015
Publication Date: 2015-10-01
Language: en
Type: preprint
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Cited By Count: 1
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