Contractual Structure and Wealth Accumulation
نویسندگان
چکیده
This paper examines whether historical wealth distributions can affect long run output and distribution despite rational saving behavior and the absence of any technological nonconvexities or externalities. We consider a model of equilibrium short period financial contracts, where poor agents face credit constraints owing to moral hazard and limited liability, and principals and agents are randomly matched every period. If agents have no bargaining power, poor agents have no incentive to save and poverty traps emerge; “history” matters and the long run wealth distribution becomes polarized into two classes, with no middle class nor any interclass mobility. If instead the market is “competitive” and agents have all the bargaining power, strong saving incentives are generated: the wealth of poor and rich agents alike drift upward indefinitely and “history” does not matter in the long run.
منابع مشابه
Wealth Inequality, Wealth Constraints and Economic Performance
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