Effects os wealth distribuition on economic activity: theorical analysis based on the brasilian economy

Abstract

This study proposes a model based on three literatures: neo-Kaleckian, Stock-Flow-Consist and wealth concentration models. Our objective is to understand the relation between income inequality, distribution of wealth and demand-side economic growth. As a first step, a basic model will be presented, with three classes (unskilled and skilled workers, and capitalists) and currency and bond wealth. This model has an analytical solution, and it will analyze the effects of wage, interest rate and marginal propensity to consume chocks on macroeconomic and distributive variables. An extended model, computationally solvable, which includes government, a central bank, commercial banks, credit, and multiple assets, will evaluate the impact of fiscal policy, tributary systems (on wealth, dividends, progressive taxation), cash transfers, minimum wage, and also effects of monetary policies, on the distribution of wealth and economic growth. The parameters for the computational solution will be obtained using Brazilian empirical data. (AU)