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Distributional Comparative Statics

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journal contribution
posted on 2017-04-11, 11:56 authored by Martin Kaae Jensen
Distributional comparative statics is the study of how individual decisions and equilibrium outcomes vary with changes in the distribution of economic parameters (income, wealth, productivity, information, etc.). This paper develops new tools to address such issues and illustrates their usefulness in applications. The central development is a condition called quasi-concave differences which implies concavity of the policy function in optimization problems without imposing differentiability or quasi-concavity conditions. The general take-away is that many distributional questions in economics which cannot be solved by direct calculations or the implicit function theorem, can be addressed easily with this paper’s methods. Several applications demonstrate this: the paper shows how increased uncertainty affects the set of equilibria in Bayesian games; it shows how increased dispersion of productivities affects output in the model of Melitz (2003); and it generalizes Carroll and Kimball (1996)’s result on concave consumption functions to the Aiyagari (1994) setting with borrowing constraints.

History

Citation

Review of Economic Studies, 2017, rdx021.

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/Department of Economics

Version

  • AM (Accepted Manuscript)

Published in

Review of Economic Studies

Publisher

Oxford University Press (OUP)

issn

0034-6527

eissn

1467-937X

Acceptance date

2017-01-07

Copyright date

2017

Available date

2019-05-17

Publisher version

https://academic.oup.com/restud/article/3829690/Distributional-Comparative-Statics

Notes

The file associated with this record is under embargo until 24 months after publication, in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.

Language

en