Optimal cycles and social inequality: What do we learn from the Gini index?

Stefano Bosi (1) , Thomas Seegmuller (2)

1 EPEE - Centre d'Etudes des Politiques Economiques
2 CES - Centre d'économie de la Sorbonne

One of the plausible explanations for macroeconomic fluctuations relies on the occurrence of endogenous deterministic cycles. In the last three decades, most of the relevant literature has rested on the assumption of a representative agent but, recently, a few papers have investigated the role of consumers' heterogeneity on endogenous fluctuations. Our article aims at taking a step forward in order to give a more suitable interpretation. To keep things as simple as possible, we introduce heterogeneous households in a two-sector optimal growth model and we study how wealth heterogeneity affects the occurrence of endogenous cycles. In contrast to previous results, we relate the existence of such cycles to the most commonly used inequality measure, the Gini index, and analyze the impact of consumers' heterogeneity on this index.

Mots clés: Endogenous cycles; two-sector models; <br />heterogeneous agents; Gini index

Domaines: Economies et finances

Stefano Bosi, Thomas Seegmuller. Optimal cycles and social inequality: What do we learn from the Gini index?. Research in Economics, 2006, 60 (1), pp.35-46. ⟨10.1016/j.rie.2005.12.003⟩. ⟨halshs-00194182⟩