The Wealth Distribution in Bewley Models with Investment Risk

35 Pages Posted: 28 Jul 2014 Last revised: 29 Jan 2023

See all articles by Jess Benhabib

Jess Benhabib

New York University - Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Alberto Bisin

New York University (NYU) - Department of Economics; New York University (NYU) - Center for Experimental Social Science (CESS); National Bureau of Economic Research (NBER)

Shenghao Zhu

New York University (NYU) - Department of Economics

Date Written: May 2014

Abstract

We study the wealth distribution in Bewley economies with idiosyncratic capital income risk. We show analytically that under rather general conditions on the stochastic structure of the economy, a unique ergodic distribution of wealth displays a fat tail; more precisely, a Pareto distribution in the right tail.

Suggested Citation

Benhabib, Jess and Bisin, Alberto and Zhu, Shenghao, The Wealth Distribution in Bewley Models with Investment Risk (May 2014). NBER Working Paper No. w20157, Available at SSRN: https://ssrn.com/abstract=2472759

Jess Benhabib (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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Alberto Bisin

New York University (NYU) - Department of Economics

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Shenghao Zhu

New York University (NYU) - Department of Economics ( email )

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