Sunday, March 16, 2014

Brian Romanchuk — Inequality In Savings Drives Wealth Inequality

Paul Krugman discusses the dynamics of wealth inequality in a recent blog: Notes on Piketty (Wonkish).... In it, he uses the standard Solow model to explain rising inequality. Although I do not have a formal model, my reading of a stock-flow consistent models implies that his analysis is not quite correct. The driving force behind wealth inequality is the differential in savings amongst households, and with a second order effect being that larger portfolios may have greater returns on their assets.
Bond Economics
Inequality In Savings Drives Wealth Inequality
Brian Romanchuk

It's the distribution.

1 comment:

Ryan Harris said...

The problem is that the poor don't save enough to be part of the good rentier class? Ohh.