Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

An agent-based model of trickle-up growth and income inequality

Abstract : We build an agent-based model to study how coordination failures, credit constraints and unequal access to investment opportunities affect inequality and aggregate income dynamics. The economy is populated by households who can invest in alternative projects associated with different productivity growth rates. Access to investment projects also depends on credit availability. The income of each house- hold is determined by the output of the project but also by aggregate demand conditions. We show that aggregate dynamics is affected by income distribution. Moreover, we show that the model features a trickle-up growth dynamics. Redistribution towards poorer households raises aggregate demand and is beneficial for the income growth of all agents in the economy. Extensive numerical simulations show that our model is able to reproduce several stylized facts concerning income inequality and social mobility. Finally, we test the impact of redistributive fiscal policies, showing that fiscal policies facilitating access to investment opportunities by poor households have the largest impact in terms of raising long-run aggregate income and decreasing income inequality. Moreover, policy timing is important: fiscal policies that are implemented too late may have no significant effects on inequality.
Document type :
Preprints, Working Papers, ...
Complete list of metadata

https://hal-sciencespo.archives-ouvertes.fr/hal-03373193
Contributor : Élisabeth Wolff-Maussion Connect in order to contact the contributor
Submitted on : Monday, October 11, 2021 - 1:33:56 PM
Last modification on : Thursday, October 14, 2021 - 3:32:22 AM

File

OFCEWP2021-19.pdf
Publisher files allowed on an open archive

Identifiers

  • HAL Id : hal-03373193, version 1

Collections

`

Citation

Elisa Palagi, Mauro Napoletano, Andrea Roventini, Jean-Luc Gaffard. An agent-based model of trickle-up growth and income inequality. 2021. ⟨hal-03373193⟩

Share

Metrics

Record views

5

Files downloads

5