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Will wealth become more concentrated in Europe? Evidence from a calibrated Post-Keynesian model

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  • Stefan Ederer
  • Miriam Rehm

Abstract

We develop and calibrate an analytical growth model in the Post-Keynesian tradition with an endogenous wealth distribution and differential returns to wealth between workers and capitalists. We show that a long-run equilibrium allows for non-zero wealth owned by workers, even as the model contains the ‘triumph of the rentier’ predicted by Piketty as a special case. The model’s calibration to ten European countries shows that the distribution of wealth is likely to become more unequal in all cases, barring political countermeasures.

Suggested Citation

  • Stefan Ederer & Miriam Rehm, 2020. "Will wealth become more concentrated in Europe? Evidence from a calibrated Post-Keynesian model," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 44(1), pages 55-72.
    • Handle: RePEc:oup:cambje:v:44:y:2020:i:1:p:55-72.
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    File URL: http://hdl.handle.net/10.1093/cje/bez014
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    Cited by:

    1. Petach, Luke & Tavani, Daniele, 2022. "Aggregate demand externalities, income distribution, and wealth inequality," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 433-446.
    2. Roth, Steve, 2021. "Why the Flow of Funds Don’t Explain the Flow of Funds: Sectoral Balances, Balance Sheets, and the Accumulation Fallacy," MPRA Paper 105281, University Library of Munich, Germany.
    3. Sasaki, Hiroaki & Sonoda, Ryunosuke, 2024. "Income Redistribution Policy, Growth, Inequality, and Employment: A Long-Run Kaleckian Approach," MPRA Paper 121968, University Library of Munich, Germany.
    4. Manuel David Cruz & Daniele Tavani, 2022. "Secular Stagnation: A Classical-Marxian View," Working Papers PKWP2229, Post Keynesian Economics Society (PKES).
    5. Ben Tippet & Özlem Onaran & Rafael Wildauer, 2024. "The Effect of Labor's Bargaining Power on Wealth Inequality in the UK, USA, And France," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 70(1), pages 102-128, March.

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