Heterogeneous Households, the Distribution of Wealth, and the Laursen‐Metzler Effect Article

Karayalçin, C. (1995). Heterogeneous Households, the Distribution of Wealth, and the Laursen‐Metzler Effect . REVIEW OF INTERNATIONAL ECONOMICS, 3(1), 86-103. 10.1111/j.1467-9396.1995.tb00054.x

cited authors

  • Karayalçin, C

authors

abstract

  • To study the effects of a terms‐of‐trade deterioration the paper constructs a dynamic model with heterogeneous households that maximize intertemporal utility. It shows that insofar as this shock leads to a redistribution of wealth‐an outcome ignored by the literature because of the representative‐agent assumption invariably adopted‐it may give rise to an initial current‐account deficit and nonmonotonic adjustment paths. the paper also buttresses the argument that heterogeneous‐household models help explain the observed “excess smoothness” of consumption. Copyright © 1995, Wiley Blackwell. All rights reserved

publication date

  • January 1, 1995

published in

Digital Object Identifier (DOI)

start page

  • 86

end page

  • 103

volume

  • 3

issue

  • 1