Idiosyncratic and aggregate risks, inequality and growth

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dc.contributor.author Getachew, Yoseph
dc.date.accessioned 2017-05-12T07:33:20Z
dc.date.issued 2017-04
dc.description.abstract The paper disaggregates productivity shocks at a firm level into idiosyncratic and aggregate risks, and studies their impacts on inequality, growth and welfare. It develops a growth model with human capital and incomplete insurance and credit markets that provides a closed-form solution for income inequality dynamics. We find that uninsured idiosyncratic risks are the most important determinants of inequality, growth and welfare. They are the source of nondegenerate wealth distribution. A lower weight of these shocks leads to lower steady-state inequality, higher growth and welfare. A redistribution of income that serves as social insurance against such risks increases welfare and decreases inequality. But, it also decreases growth by distorting individual consumption and saving decisions. en_ZA
dc.description.department Economics en_ZA
dc.description.embargo 2019-04-30
dc.description.librarian hb2017 en_ZA
dc.description.uri http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-8586 en_ZA
dc.identifier.citation Getachew, YY 2017, 'Idiosyncratic and aggregate risks, inequality and growth', Bulletin of Economic Research, vol. 69, no. 2, pp. 109-123. en_ZA
dc.identifier.issn 0307-3378 (print)
dc.identifier.issn 1467-8586 (online)
dc.identifier.other 10.1111/boer.12096
dc.identifier.uri http://hdl.handle.net/2263/60335
dc.language.iso en en_ZA
dc.publisher Wiley en_ZA
dc.rights © 2016 Board of Trustees of the Bulletin of Economic Research and John Wiley & Sons Ltd. This is the pre-peer reviewed version of the following article : Idiosyncratic and aggregate risks, inequality and growth, Bulletin of Economic Research, vol. 69, no.2, pp. 109-123, 2017. doi : 10.1111/boer.12096. The definite version is available at : http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-8586. en_ZA
dc.subject Inequality en_ZA
dc.subject Growth en_ZA
dc.subject Productivity shock en_ZA
dc.subject Idiosyncratic risk en_ZA
dc.subject Aggregate risk en_ZA
dc.subject Welfare en_ZA
dc.title Idiosyncratic and aggregate risks, inequality and growth en_ZA
dc.type Postprint Article en_ZA


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