Table of contents for Consumption structure and macroeconomics : structural change and the relationship between inequality and growth / Reto Foellmi.


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2 Hierarchic Preferences                                             9
2.1  Basic Set-up  ...............................                9
2.1.1  Individual Demand  ..................        .....   12
2.1.2  Aggregate Demand  ............. ..........           14
2.2  Hierarchy and CRRA  ...................... ... 20
2.3  Non-Homothetic Utility in the Previous Theoretical Literature  .  23
2.4  Appendix  .....    . ...........    ............. .      .  26
2.4.1  Convergence of the Utility Integral . . . . . . . . . . . ... 26
2.4.2  Proof of Proposition  1  .....................       28
3 Structural Change and Balanced Growth                             31
3.1 Introduction . . . . . . . . ....        . . . . . . . . . . .  .  31
3.2  Static Equilibrium  ...... .............           .....    36
3.2.1  Preferences and Demand . . . . . . . . . . . . . . .....  . 36
3.2.2  Optimal Price  Setting  .....................        37
3.2.3  Demand and Price Structure . . . . . . . . . . . . . ....  37
3.3  Dynamics of the Economy . . . . . . . . . . . . . . ..... . . .  .  40
3.3.1  R&D and the Resource Constraint ........ . ...... .. 40
3.3.2 Intertemporal Consumption Choice . . . . . . . . . . ...  42
3.4  Equilibrium Growth Path .....    ...................        43
3.4.1  Definition of Equilibrium Growth Path . . . . . . . .. . . .  43
3.4.2  A  Unique Equilibrium  .....................        45
3.5 Structural Change and the Kaldor Facts . . . . . . . . . . . . ...  49
3.5.1  The  Kaldor Facts  ........................         49
3.5.2  Structural Change  .......................          51
3.5.3  The Impact of Hierarchic Preferences . . . . . . . . . ...  55
3.6  Calibration  ...................        .  ..........      57
3.7  Other Types of Equilibria  .......................         61
3.8 Is the Optimal Patent Duration Infinite? . . . . . . . . . . . . ...  64
3.9  Discussion and Extensions . . . . . . . . . . . . . . ..... . . .  .  66
3.10  Appendix  ...................        .  ..........     ..  68
3.10.1 Proof of Lemma 1 ....................... 68
3.10.2 Proof of Lemma 2 ................... .....          68
3.10.3  Proof of Lemma  3  .......................         70
3.10.4 Proof of Proposition 4 .... ................. 71
3.10.5 Proof of Proposition 9 (Patent Duration) . . . . . . . ...  71
4 Inequality and Research Incentives                               75
4.1  Introduction  . . . . . . . . . . . . . . ..... . . . . . . . . .. ....   75
4.2  Static Equilibrium  ...................        ........    78
4.2.1  Hierarchic Preferences and Consumption Choices .  . . . . . 78
4.2.2  The Determination of Prices and the Structure of Consump-
tion  .......   ............       ............      80
4.2.3  Solving the Static Consumers' Problem  . . . . . . . . ...  83
4.2.4  Static Expenditures and Utilities  . . . . . . . . . . . . . . .  85
4.3 Dynamics of the Economy . . . . . . . . . . . . . . ..... . . .  .  87
4.3.1 Intertemporal Allocation of Expenditures . . . . . . . ..  87
4.3.2  The Supply Side: Technology and Resource Constraint . . . 88
4.3.3  The Innovation Process . . . . . . . . . . . . . . .....  . 91
4.4 Distribution of Income and Wealth . . . . . . . . . . . . . . . ...  93
4.5  General Equilibrium  ...................         ...... 94
4.5.1  The Three Possible Regimes . . . . . . . . . . . . . . . ...  95
4.5.2  A Graphical Representation of the Equilibrium ...... . . 98
4.5.3  Steeper Hierarchy  .......................         102
4.6 The Impact of Inequality on Growth . . . . . . . . . . . . . . .. 103
4.6.1  No Traditional Sector (v = 0) . . . . . ..... ......... ..103
4.6.2  The General Case v >  0  ....................      104
4.7  Sum m ary  . . . . . . . . . . . . . .. . .  . . . . . . . . . . . . . . .  106
4.8  A ppendix  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  108
4.8.1  The Case With Preemptive Patenting . . . . . . . . . ... 108
4.8.2  The Case Where All Individuals Buy All Products . . . . . 112
4.8.3  Proof of Lemma 5 ...... ................. 114
4.8.4  Proof of Proposition 11 . . . . . . ..... .......... .. 116
5 Markups and Exclusion                                          117
5.1  Introduction  ...................       ............     117
5.2 Monopolistic Competition With Non-Homothetic Preferences . . . 121
5.2.1  Consumers and Firms ..................... 123
5.2.2  Restrictions on Preferences and Distribution  . . . . . .. .124
5.3 Symmetric versus Asymmetric Equilibria . . . . . . . . . . . ... 126
5.3.1  Symmetric Equilibrium  . . . . . . . . . . . . . . ..... .  126
5.3.2 A Condition Whether Symmetry Constitutes an Equilibrium 129
5.3.3  The Asymmetric Case ('Exclusion') . . . . ..... . . .  . 131
5.4  Unemployment  ...................           .........    135
5.4.1  Symmetric Equilibrium  . . . . . . . . . . . . . . .....  . 135
5.4.2  Asymmetric Equilibrium . . . . . . . ..... ........ ..136
5.5  Discussion  ...................        ............      139
5.6  Appendix  ...................           ............. 141
6 Conclusions                                                    143



Library of Congress subject headings for this publication: Consumption (Economics) Mathematical models, Income distribution Mathematical models