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Constrained Efficie...
Constrained Efficiency in the Neoclassical Growth Model With Uninsurable Idiosyncratic Shocks
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Davila, Julio (författare)
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Hong, Jay H. (författare)
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- Krusell, Per (författare)
- Gothenburg University,Göteborgs universitet,Stockholms universitet,Institutet för internationell ekonomi,Institutionen för nationalekonomi med statistik,Department of Economics
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Rios-Rull, Jose-Victor (författare)
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(creator_code:org_t)
- 2012
- 2012
- Engelska.
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Ingår i: Econometrica. - 0012-9682 .- 1468-0262. ; 80:6, s. 2431-2467
- Relaterad länk:
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https://urn.kb.se/re...
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https://doi.org/10.3...
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https://gup.ub.gu.se...
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Abstract
Ämnesord
Stäng
- We investigate the welfare properties of the one-sector neoclassical growth model with uninsurable idiosyncratic shocks. We focus on the notion of constrained efficiency used in the general equilibrium literature. Our characterization of constrained efficiency uses the first-order condition of a constrained planner's problem. This condition highlights the margins of relevance for whether capital is too high or too low: the factor composition of income of the (consumption-)poor. Using three calibrations commonly considered in the literature, we illustrate that there can be either over- or underaccumulation of capital in steady state and that the constrained optimum may or may not be consistent with a nondegenerate long-run distribution of wealth. For the calibration that roughly matches the income and wealth distribution, the constrained inefficiency of the market outcome is rather striking: it has much too low a steady-state capital stock.
Ämnesord
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Nyckelord
- Constrained efficiency
- uninsurable shocks
Publikations- och innehållstyp
- ref (ämneskategori)
- art (ämneskategori)
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