TITLE:
Pareto Distribution of Wealth Based on Overlapping Generation Model
AUTHORS:
Ryo Nagata
KEYWORDS:
Pareto Distribution of Wealth, Overlapping Generation Model, Cobb-Douglas Utility Function, Steady State Price Equilibrium
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.11,
August
16,
2018
ABSTRACT: In this paper, we shed light on the Pareto
distribution of wealth on the basis of an overlapping generation model. We
deduce in the model that the basic reason for a particular shape of Pareto
distribution is attributed to the distribution of utility function among consumers.
More specifically, we show that a formula relating the distribution of utility
function to the distribution of wealth is analytically obtainable on the basis
of the Cobb-Douglas utility function. By simulation, we recognize that the
formula actually gives us a well approximation of a Pareto distribution.