Piketty's main theoretical prediction is that a small elite will own all wealth if capitalism is left
to its own devices. We formulate and calibrate a Post-Keynesian model with an endogenous
distribution of wealth between workers and capitalists. The model permits Piketty's Corner solution of all wealth held by capitalists; however, it also shows that interior solutions with a
stable, non-zero wealth share of workers, a stable wealth-to-income ratio, and a stable and
positive gap between the profit and the growth rate determined by the Cambridge equation.
Furthermore, simulations show that the model confirms to Piketty's empirical findings in a transitional phase, in which the wealth share of capitalists rises to over 60%, the wealth-toincome ratio increases, and income inequality rises. Finally, we show that the introduction of
a wealth tax as suggested by Piketty could neutralize the rise in wealth concentration. / Series: INEQ Working Paper Series
| Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:6502 |
| Date | 11 September 2018 |
| Creators | Ederer, Stefan, Rehm, Miriam |
| Publisher | WU Vienna University of Economics and Business |
| Source Sets | Wirtschaftsuniversität Wien |
| Language | English |
| Detected Language | English |
| Type | Paper, NonPeerReviewed |
| Format | application/pdf |
| Relation | http://epub.wu.ac.at/6502/ |
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