The Dynamics of Capital Accumulation in the US: Simulations after Piketty

48 Pages Posted: 21 Apr 2015

See all articles by Philippe De Donder

Philippe De Donder

CNRS, Toulouse School of Economics

John E. Roemer

Yale University - Department of Political Science; Yale University - Cowles Foundation

Multiple version iconThere are 3 versions of this paper

Date Written: April 20, 2015

Abstract

We calibrate a sequence of four nested models to study the dynamics of wealth accumulation. Individuals maximize a utility function whose arguments are consumption and investment. They desire to accumulate wealth for its own sake — this is not a life-cycle model. A competitive firm produces a single good from labor and capital; the rate of return to capital and the wage rate are market-clearing. The second model introduces political lobbying by the wealthy, whose purpose is to reduce the tax rate on capital income. The third model introduces differential rates of return to capitals of different sizes. The fourth model introduces inheritance and intergenerational mobility.

Keywords: Piketty, Dynamics of wealth accumulation, Intergenerational mobility, Kantian equilibrium

JEL Classification: D31, D58, E37

Suggested Citation

De Donder, Philippe and Roemer, John E., The Dynamics of Capital Accumulation in the US: Simulations after Piketty (April 20, 2015). Cowles Foundation Discussion Paper No. 1998. Available at SSRN: https://ssrn.com/abstract=2596568 or http://dx.doi.org/10.2139/ssrn.2596568

Philippe De Donder

CNRS, Toulouse School of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

HOME PAGE: http://https://www.tse-fr.eu/people/philippe-de-donder

John E. Roemer (Contact Author)

Yale University - Department of Political Science ( email )

Box 208269
New Haven, DC 06520-8269
United States
203-432-5249 (Phone)
203-432-6196 (Fax)

HOME PAGE: http://pantheon.yale.edu/~jer39/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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