Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Economic Allocations with Permanent Heterogeneities: An Example

Vol.23, No.1, March , 30–47



  •   (Sogang University)

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Abstract  

Permanent heterogeneities in initial asset, preference for leisure, and individual productivity are introduced in a dynamic general equilibrium model and the functional relationship between the heterogeneities and economic allocations is studied. With the permanent heterogeneities, we show that a unique saddle path equilibrium is supported by an initial asset distribution. Depending on the heterogeneities, the distributions of consumption, income, asset and labor income may differ incredibly. However, the associated aggregate economies are not different very much.


Keywords
   Heterogeneities, Saddle Path Equilibria, Income Distribution, Aggregate Productivity

JEL classification codes
   E13, E21, E25, O40
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