When does inequality freeze an economy?

Autor(es)

Jerico, Joao Pedro ; Landes, Francois P. ; Marsili, Matteo ; Perez Castillo, Isaac ; Volpati, Valerio

• Tipo de documento: Artigo Científico
• Fonte: JOURNAL OF STATISTICAL MECHANICS-THEORY AND EXPERIMENT; v. N/A, p. 23-pg., 2016-07-01.

Resumo

Inequality and its consequences are the subject of intense recent debate. Using a simplified model of the economy, we address the relation between inequality and liquidity, the latter understood as the frequency of economic exchanges. Assuming a Pareto distribution of wealth for the agents, that is consistent with empirical findings, we find an inverse relation between wealth inequality and overall liquidity. We show that an increase in the inequality of wealth results in an even sharper concentration of the liquid financial resources. This leads to a congestion of the flow of goods and the arrest of the economy when the Pareto exponent reaches one. (AU)

• Processo FAPESP: 14/16045-6 - Economias aleatórias com agentes de racionalidade limitada
• Beneficiário: João Pedro Jericó de Andrade
• Modalidade de apoio: Bolsas no Exterior - Estágio de Pesquisa - Doutorado