DYNAMICS OF THE CONSUMPTION–CAPITAL RATIO, THE SAVING RATE, AND THE WEALTH DISTRIBUTION IN THE NEOCLASSICAL GROWTH MODEL

Abstract

The paper utilizes a common approach to derive sufficient conditions for strictly monotonic behavior of three ratios along the transition to the steady state in the Ramsey–Cass–Koopmans model: the consumption–capital ratio, the consumption–output ratio (and the saving rate), and the consumption–wage ratio. These conditions are then applied to derive additional results on the transitional dynamics of the distribution of wealth in the model (when individual consumers are differentiated by their initial wealth endowments).