Inequality, Mobility and the Financial Accumulation Process: A Computational Economic Analysis

University of Yale SOM, Accounting Research Workshop, 24 April 2018 2nd International Workshop on “Financial Markets and Nonlinear Dynamics” (FMND), Paris, 4-5 June 2015 Econophysics Colloquium (EC 2015), Prague, 14 September 2015

Journal of Economic Interaction and Coordination (2019). DOI: 10.1007/s11403-019-00236-7

31 Pages Posted: 10 Jul 2015 Last revised: 14 Jan 2019

See all articles by Yuri Biondi

Yuri Biondi

French National Center for Scientific Research (CNRS)

Simone Righi

Department of Computer Science; University College London - Financial Computing and Analytics Group, Department of Computer Science

Date Written: January 11, 2019

Abstract

Our computational economic analysis investigates the relationship between inequality, mobility and the financial accumulation process. Extending the baseline model by Levy et al., we characterise the economic process through stylised return structures generating alternative evolutions of income and wealth through time. First, we explore the limited heuristic contribution of one and two factors models comprising one single stock (capital wealth) and one single flow factor (labour) as pure drivers of income and wealth generation and allocation over time. Second, we introduce heuristic modes of taxation in line with the baseline approach. Our computational economic analysis corroborates that the fi nancial accumulation process featuring compound returns plays a significant role as source of inequality, while institutional arrangements including taxation play a significant role in framing and shaping the aggregate economic process that evolves over socioeconomic space and time.

Keywords: inequality, economic process, compound interest, simple interest, taxation, minimal institution, computational economics, econophysics

JEL Classification: C46, C63, D31, E02, E21, E27, D63, H22

Suggested Citation

Biondi, Yuri and Righi, Simone, Inequality, Mobility and the Financial Accumulation Process: A Computational Economic Analysis (January 11, 2019). University of Yale SOM, Accounting Research Workshop, 24 April 2018 2nd International Workshop on “Financial Markets and Nonlinear Dynamics” (FMND), Paris, 4-5 June 2015 Econophysics Colloquium (EC 2015), Prague, 14 September 2015 . Available at SSRN: https://ssrn.com/abstract=2628536 or http://dx.doi.org/10.2139/ssrn.2628536

Yuri Biondi (Contact Author)

French National Center for Scientific Research (CNRS) ( email )

IRISSO - University Paris Dauphine PSL
Place Marechal Lattre Tassigny
75016 Paris
France

HOME PAGE: http://yuri.biondi.free.fr/

Simone Righi

Department of Computer Science ( email )

66-72 Gower Street
London, London WC1E 6EA
Great Britain

HOME PAGE: http://https://sites.google.com/view/simone-righi/

University College London - Financial Computing and Analytics Group, Department of Computer Science ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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