Abstract
We study the impact of a minimum consumption requirement on the rate of economic growth and the evolution of wealth distribution. The requirement introduces a positive dependence between the intertemporal elasticity of substitution and household wealth. This dependence implies a transition phase during which the growth rate of per-capita quantities rise toward their steady-state values and the distributions of wealth, consumption, and permanent income become more unequal. We calibrate the minimum consumption requirement to match estimates available for a sample of Indian villagers and find that these transitional effects are quantitatively significant and depend importantly on the economy's steady-state growth rate.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 482-505 |
| Number of pages | 24 |
| Journal | Macroeconomic Dynamics |
| Volume | 3 |
| Issue number | 4 |
| State | Published - 1999 |
| Externally published | Yes |
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Keywords
- Growth
- Inequality
- Minimum consumption
- Wealth distribution
ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Minimum consumption requirements : Theoretical and quantitative implications for growth and distribution. / Chatterjee, Satyajit; Ravikumar, B.
In: Macroeconomic Dynamics, Vol. 3, No. 4, 1999, p. 482-505.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Minimum consumption requirements
T2 - Theoretical and quantitative implications for growth and distribution
AU - Chatterjee, Satyajit
AU - Ravikumar, B.
PY - 1999
Y1 - 1999
N2 - We study the impact of a minimum consumption requirement on the rate of economic growth and the evolution of wealth distribution. The requirement introduces a positive dependence between the intertemporal elasticity of substitution and household wealth. This dependence implies a transition phase during which the growth rate of per-capita quantities rise toward their steady-state values and the distributions of wealth, consumption, and permanent income become more unequal. We calibrate the minimum consumption requirement to match estimates available for a sample of Indian villagers and find that these transitional effects are quantitatively significant and depend importantly on the economy's steady-state growth rate.
AB - We study the impact of a minimum consumption requirement on the rate of economic growth and the evolution of wealth distribution. The requirement introduces a positive dependence between the intertemporal elasticity of substitution and household wealth. This dependence implies a transition phase during which the growth rate of per-capita quantities rise toward their steady-state values and the distributions of wealth, consumption, and permanent income become more unequal. We calibrate the minimum consumption requirement to match estimates available for a sample of Indian villagers and find that these transitional effects are quantitatively significant and depend importantly on the economy's steady-state growth rate.
KW - Growth
KW - Inequality
KW - Minimum consumption
KW - Wealth distribution
UR - http://www.scopus.com/inward/record.url?scp=0033268129&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0033268129&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:0033268129
VL - 3
SP - 482
EP - 505
JO - Macroeconomic Dynamics
JF - Macroeconomic Dynamics
SN - 1365-1005
IS - 4
ER -