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