Income Distribution and Macroeconomics

Oded Galor ^[1] ; Joseph Zeira ^[2]
1. [1] Brown University
  
  Brown University
  
  City of Providence, Estados Unidos
2. [2] Hebrew University of Jerusalem
  
  Hebrew University of Jerusalem
  
  Israel
Localización: Review of economic studies, ISSN 0034-6527, Vol. 60, Nº 202, 1993, págs. 35-52
Idioma: inglés
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Resumen
- This paper analyzes the role of wealth distribution in macroeconomics through investment in human capital. It is shown that in the presence of credit markets' imperfections and indivisibilities in investment in human capital, the initial distribution of wealth affects aggregate output and investment both in the short and in the long run, as there are multiple steady states. This paper therefore provides an additional explanation for the persistent differences in per-capita output across countries. Furthermore, the paper shows that cross-country differences in macroeconomic adjustment to aggregate shocks can be attributed, among other factors, to differences in wealth and income distribution across countries.