Wealth Accumulation and Aggregate Demand Stagnation

Rishabh Kumar
Written By SCEPA

WORKING PAPER

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I develop a structuralist model of long run growth and distribution with capitalists and workers.

Capitalists’ tendency to over-accumulate has negative consequences for their own steady state wealth, through the mechanisms of demand driven economic growth. As an application, it is predicted that observed levels of wealth inequality can cost the US economy approximately $500 billion of annual output in current terms. The model offers support for public policies looking to equalize the distribution of wealth and income whilst also improving macroeconomic stability and performance.

SCEPA
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