Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk

Clemens C, Heinemann M (2015)
Journal of Macroeconomics 45: 300-317.

Zeitschriftenaufsatz | Veröffentlicht | Englisch
 
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Autor/in
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Abstract / Bemerkung
This paper describes the equilibrium properties and dynamics of a model which combines the key features of the standard incomplete market model (Aiyagari, 1994) with a standard endogenous growth mechanism to gain a deeper understanding of the feedback effects between growth and wealth inequality in the presence of credit frictions and idiosyncratic risk. We characterize growth equilibria and find that a balanced growth path not necessarily exists if households are subject to ad hoc borrowing constraints. 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. The growth rate responds to changes in the wealth distribution and displays transitional dynamics towards the balanced growth path.
Stichworte
Endogenous growth Borrowing constraints Wealth distribution Idiosyncratic risk Heterogeneous agents
Erscheinungsjahr
2015
Zeitschriftentitel
Journal of Macroeconomics
Band
45
Seite(n)
300-317
ISSN
0164-0704
Page URI
https://pub.uni-bielefeld.de/record/2917758

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Clemens C, Heinemann M. Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk. Journal of Macroeconomics. 2015;45:300-317.
Clemens, C., & Heinemann, M. (2015). Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk. Journal of Macroeconomics, 45, 300-317. doi:10.1016/j.jmacro.2015.05.008
Clemens, C., and Heinemann, M. (2015). Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk. Journal of Macroeconomics 45, 300-317.
Clemens, C., & Heinemann, M., 2015. Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk. Journal of Macroeconomics, 45, p 300-317.
C. Clemens and M. Heinemann, “Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk”, Journal of Macroeconomics, vol. 45, 2015, pp. 300-317.
Clemens, C., Heinemann, M.: Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk. Journal of Macroeconomics. 45, 300-317 (2015).
Clemens, Christiane, and Heinemann, Maik. “Endogenous Growth and Wealth Inequality under Incomplete Markets and Idiosyncratic Risk”. Journal of Macroeconomics 45 (2015): 300-317.