WEALTH INEQUALITY, ORr–g, IN THE ECONOMIC GROWTH MODEL

Abstract

I investigate a simple continuous-time overlapping generations model with a neoclassical production function. I demonstrate that the degree of wealth inequality is positively related to the difference between the real interest raterand the growth rate of incomeg, and ifgfalls, ther – ggap widens and inequality worsens. I also argue that a wealth tax reduces the wealth inequality. All these results are consistent with the famous predictions advanced by Thomas Piketty inCapital in the Twenty-First Century(2014).