Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk

Clemens C, Heinemann M (2012) Working Papers in Economics and Management; 01-2012.
Bielefeld: Bielefeld University, Department of Business Administration and Economics.

Diskussionspapier | Veröffentlicht | Englisch
 
Download
OA
Autor/in
;
Abstract / Bemerkung
This paper combines the Aiyagari/Huggett-type standard incomplete markets model with the Arrow/Romer approach to growth to analyze feedback effects between growth and inequality, both endogenously determined in equilibrium. We derive conditions on existence/ nonexistence of balanced growth paths. Major results include that growth, inequality, and risk are positively related in our model, but we also identify a hump-shaped relationship between welfare and risk, indicating a tradeoff relationship between risk-pooling and growth in the determination of welfare. We discuss transitory dynamics and policy implications. A growth policy simultaneously reduces wealth inequality in the economy. The benefits and burdens of the underlying policy are unequally distributed, which raises the issue of politico-economic equilibria. We provide results on majority voting, finding that that the median voter prefers less than optimal subsidies on investment. Interestingly, the society might even vote against a policy providing full insurance against idiosyncratic risk, because welfare losses of lower growth more than offset welfare gains from lower risk.
Stichworte
endogenous growth; idiosyncratic risk; borrowing constraints; heterogeneous agents; wealth distribution; optimal policy
Erscheinungsjahr
2012
Band
01-2012
Seite(n)
32
ISSN
2196-2723
Page URI
https://pub.uni-bielefeld.de/record/2554434

Zitieren

Clemens C, Heinemann M. Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk. Working Papers in Economics and Management. Vol 01-2012. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2012.
Clemens, C., & Heinemann, M. (2012). Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk (Working Papers in Economics and Management, 01-2012). Bielefeld: Bielefeld University, Department of Business Administration and Economics. doi:10.4119/unibi/2554434
Clemens, C., and Heinemann, M. (2012). Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk. Working Papers in Economics and Management, 01-2012, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Clemens, C., & Heinemann, M., 2012. Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk, Working Papers in Economics and Management, no.01-2012, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
C. Clemens and M. Heinemann, Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk, Working Papers in Economics and Management, vol. 01-2012, Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2012.
Clemens, C., Heinemann, M.: Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk. Working Papers in Economics and Management, 01-2012. Bielefeld University, Department of Business Administration and Economics, Bielefeld (2012).
Clemens, Christiane, and Heinemann, Maik. Endogenous Growth, the Distribution of Wealth, and Optimal Policy under Incomplete Markets and Idiosyncratic Risk. Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2012. Working Papers in Economics and Management. 01-2012.
Alle Dateien verfügbar unter der/den folgenden Lizenz(en):
Copyright Statement:
This Item is protected by copyright and/or related rights. [...]
Volltext(e)
Access Level
OA Open Access
Zuletzt Hochgeladen
2019-09-06T09:18:10Z
MD5 Prüfsumme
6bfeacd915bb264fc19f9a201771a4de

Export

Markieren/ Markierung löschen
Markierte Publikationen

Open Data PUB

Suchen in

Google Scholar