Heterogeneous time preferences and the distribution of wealth

  • Ryder H
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This paper shows that when households are heterogeneous with respect to time preference, the capital market functions as a powerful mechanism generating and maintaining a highly skewed distribution of wealth. A simple model of household savings is embedded into (1) a consumption loans economy and (2) a productive capital economy. The robustness of the conclusions is tested by relaxing some of the simplifying assumptions. Various counteracting instruments of social policy are discussed. © 1985.

Author-supplied keywords

  • Inequality
  • capital theory
  • optimal saving
  • time preference

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  • Harl E. Ryder

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