When a `rat race' implies an intergenerational wealth trap

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Tác giả: Joel Nishimura

Ngôn ngữ: eng

Ký hiệu phân loại: 330.16 Theories of wealth

Thông tin xuất bản: 2018

Mô tả vật lý:

Bộ sưu tập: Metadata

ID: 161915

 Two critical questions about intergenerational outcomes are: one, whether significant barriers or traps exist between different social or economic strata
  and two, the extent to which intergenerational outcomes do (or can be used to) affect individual investment and consumption decisions. We develop a model to explicitly relate these two questions, and prove the first such `rat race' theorem, showing that a fundamental relationship exists between high levels of individual investment and the existence of a wealth trap, which traps otherwise identical agents at a lower level of wealth. Our simple model of intergenerational wealth dynamics involves agents which balance current consumption with investment in a single descendant. Investments then determine descendant wealth via a potentially nonlinear and discontinuous competitiveness function about which we do not make concavity assumptions. From this model we demonstrate how to infer such a competitiveness function from investments, along with geometric criteria to determine individual decisions. Additionally we investigate the stability of a wealth distribution, both to local perturbations and to the introduction of new agents with no wealth.
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